1.1 nature of business activity -...

Input -----> Process----> Output

Land -

Labor -

Capital -

Entrepreneurship-

Factors of production •

Nature resources -

Land -

Skilled

Mental-

Unskilled

Physical -

Labor-

Non nature resources -

Capital -

People willing to take a risk to make profit-

Entrepreneurship-

1.1 Nature Of Business ActivityWednesday, September 4, 20138:53 AM

IB Business And Management

Activity 1

In MKS

Trees

Land-

Teachers

Cleaners

Principle □

Admistraters □

Accounts □

Board of chairs □

Management

Labor -

Tables

Boards (white/pin)

Building

Equipment

Books

Projectors

Computers

Capital -

Management

Entrepreneurship -

Input 1.

Used to make the building in which the students will be accommodated within their classes

The trees are used to give the schools court yard a nice appearance

Land -

Used to teach and manage the whole system of the school

Labor-

Used to complete the class room building in which the students will be able to study and take the lesson which the school has to offer

Will also be used to give in the knowledge that the labors (teachers) have to the costumers (students)

Capital -

Taking a risk to start this school

Entrepreneurship -

Process 2.

The students that attend this school end up with the knowledge and degree -

Output 3.

Arooba Dhaduk Mr. Jules Business and managements

Class Work Wednesday, September 4, 20139:24 AM


is a decision making organization that involves input that are then processed and then produce the output that then is bought by customers which gives you profits.

Business:

goods and services Product:

tangible goodsGoods:

intangible goods Services:

are the basic necessities that a person must have in order to survive Needs:

are the desired things; things people would like to have Wants:

a place or process where the buyer (customers) and sellers (business) meet to tradeMarket:

revenue - expenses Profit:

Non Government OrgNGO's:

person or organization that buy a productCustomers:

the person who uses the product Consumer:

Is the difference between the value of inputs (the cost of production) and the value of output (the goods and services that are sold to customers.)

Added value:

Are products by other businesses to produce good or services Capital goods (producer goods):

Durable good Non durable foods

Are the products that are sold to the general public other then other businessConsumer goods

Is the next best alternative choice when making a decision Opportunity cost:

The cost of producing a product Accounting cost:

Is used to refer to the specialization of peopleDivision of labor:

Key words Wednesday, September 4, 201310:02 AM


rent○

Land -

Wages○

Salary ○

Labor-

Interest ○

Capital-

Profits○

Entrepreneurship-

Factors of production

Factors of productionWednesday, September 4, 20139:43 AM


Individual: Doctor, lawyers -

Departments: Human resources, production, Finance -

Corporation: Apple, samsung -

Regional: wallstreet -

National: Japan -

MNC-multi national companiesINC- incorporated national company

Is used to refer to the specialization of people

Division of labor

Increased productivity -

Increased efficiency -

Standardization-

Higher profit margin -

Advantages of specialization

Boredom -

Inflexible -

lack of autonomy-

Capital cost -

Disadvantage

Specialization Wednesday, September 4, 201310:14 AM


Is responsible for the process of converting raw materials into finished goods, ready for delivery to customers

Product (operation)

Is responsible for identifying and satisfying consumer wants and needsMarketing

Is in charge of managing the organization's money Financing

Is responsible for managing the personnel of the organization Human resources

Google/apple

Finance manager/ director -

Finance controller -

Auditor -

Financial accountant -

Management accountant -

Accountant-

Account assistant-

CFOAccounting/finance

Business Functions Sunday, September 8, 20139:07 AM


Is the next best alternative choice when making a decisionOpportunity cost

Total revenue- total cost

Revenue < cost=lossRevenue > cost= profitRevenue = cost=break even

Profit

Opportunity Cost / ProfitSunday, September 8, 20139:23 AM


Extraction -

Natural resources -

Found in less developed countries

Primary

Manufacturing -

Found in developed and developing

Secondary

Services -

Found in all developing, developed and less developed countries

Tertiary

Less developed (Africa) Developing (UAE, BH)Developed (North Europe, North America)

Aliko dangote-riches black person Business Sectors Tuesday, September 10, 20138:57 AM


Business andManagement:1.1 Nature of Business Activity

•

Lesson 1: What is a business?•

1. Focus Question•

What is a business?

2a. So…what is a business?•

The difference between carrying on a business and a hobby is that a business has an expectation of profit.

A business is an activity performed for profit.○

A person who collects and sells baseball cards on a regular basis from a store is engaged in a business.

While a casual collector, who will occasionally trade a card or two with friends is probably engaged in a hobby.

It is run in a systematic, continuous and regular businesslike manner, and has ordinary commercial principles governing it (such as business and accounting records).

○

The distinction is important for tax purposes as losses from a business are tax-deductible, while losses generated from a hobby are not.

○

What is the difference between a hobby and a business?•

2b. So…what is a business?•

“The only purpose of a business is to create customers.” •

– Peter Drucker

Business exist to satisfy the NEEDS and WANTS of people, organizations, and governments. ○

A business can be defined as an organization that provides goods and services to others who want or need them.

•

Basic necessities that a person MUST have in order to survive.○

What is a need?•

Things that a person would LIKE to have. ○

What is a want?•

2c. So…what is a business?•

Human resource management○

Production○

Marketing and finance○

As a business grows it is important to have clearly defined functions or processes.•

Social changes○

Technological developments○

External factors; beyond the control of the company…•

Slide notes Wednesday, October 2, 20139:39 AM


The level of economic activity○

Environmental issues○

Government legislation and policies○

Oil crisis○

Health care○

Natural disasters○

Outbreak of war○

External Shock:•

“It is easy to open a business, but much more difficult to keep it open.”○

- Chinese proverb

Remember:•

3. The Marketplace•

Is a place where buyers (customers/consumers) and sellers (businesses) meet to trade.○

What is the marketplace?•

Physical Form: such as a shop or restaurant•

Non-physical Form: such as e-commerce•

The people or organizations that buy a product.○

Who are the customers?•

Be careful when distinguishing between the two concepts. They are often interchangeable, but have very different meanings.

Are the people or organizations that actually use the product.○

Who are the consumers?•

4. Types of Products•

All businesses produce goods and/or services•

Products sold to the general public

They last a long time and can be used again.

Clothes, cars etc.

Durable goods□

They need to be consumed after their purchase.

Fresh food, meal at a restaurant, etc.

Non-durable goods□

What are the two types of consumer goods?

Consumer goods:○

Products purchased by other businesses.

Can you think of any examples?□

These are used to produce other goods.

Capital goods / Producer goods:○

What types of products do businesses produce?•

Services:

4b. Types of Products•


Are intangible products provided by businesses.

Doctors (health care)□

Bus and rail companies (transportation)□

Restaurants (food)□

Gyms and sports centers (recreation)□

Lawyers (legal advice)□

Teachers (education)□

Sometimes the results of the service are tangible.

Services:○

5. Adding Value•

Value of outputs - Value of inputs = Value added

What does value added mean?○

All businesses must add value in the production process.•

Value added allows a business to sell its products for more than its production costs, thus earning a profit.

○

Suppose that the input costs (labor and components) for producing a Plasma TV are 500 dollars.

$1500, this surplus will contribute to the firms profit.□

If customers are willing to pay 2000 dollars for the TV, what is the value added?

For example:○

(goods & services sold to customers)- (costs of production)

Example, services of an electrician, teacher, accountant, customers are paying for the skills, expertise, and experience that they do not personally have.

○

This concept also applies to the service sector.•

5b. Adding Value•

Speed or quality of service○

Prestige connected with the acquisition○

Feel-good factor○

Perceived value for money○

Quality of the finished good○

Brand image / brand loyalty○

Taste or design○

Inability to obtain the product cheaper elsewhere○

What are some reasons for customers willing to pay in excess of the cost of producing goods and services?

•

A 100-page fashion magazine1.

A photo of a famous celebrity with a signed autograph.2.

A state-of-the-art laptop computer.3.

Explain how the following products have value added.•

6. Opportunity Cost andBusiness Activity

•


Business Activity

is the value of a product forgone to produce or obtain another product.

What is opportunity cost?○

If you go to university the accounting cost would be the tuition fees and other costs related to studying at university.

□

Do not look at the cost or value of forgone choices. They look at the actual cost of operations.

The opportunity cost would be the forgone income that could have been earned had the person chosen to work instead of studying.

Likewise, a student would hope that by studying for a degree that he would earn a higher salary to offset the accounting and opportunity costs of obtaining that degree.

What is accounting cost?○

Businesses make decisions that affect their daily operations.•

7. The Role of Profit inBusiness Activity

•

A firms total revenue – its total costs = profit○

How would you calculate profit?•

The inflows of money, sale of products.○

What is revenue?•

The outflows of money, to finance production.○

What are costs?•

Business costs > than revenues = a loss○

How would you calculate a loss?•

This will ensure they earn a return on their investment (ROI)○

The majority of businesses will aim to provide goods and services at a profit.•

7b. The Functions of Profit•

Provides an incentive to produce.1.

Acts as a reward for risk takers.2.

It encourages invention and innovation.3.

Acts as an indicator of growth or decline.4.

It is a source of finance.5.

What are the functions of profit?•

Even for Non-profit Organizations it is important to make a SURPLUS (revenues exceeding costs).○

In the end, all businesses MUST make profits to survive in the long run.•

Any surplus is put back into the business.○

Profits are usually divided up among its owners.○

Confused? What is the difference between profits and surplus?•

8. Factors of Production•

Resources or factors of production or factor inputs.○

In order to produce a good or provide a service you need what?•

What are the factors of production of a book?•


Paper, ink, equipment for printing and binding, editor etc.○

What are the factors of production of a book?•

Renewable resources – fish, trees, water

Non-renewable resources – minerals, fossil fuels

Land – natural resources found on the planet1.

Labor – physical and mental effort of people 2.

Capital – all non-natural resources used in production3.

Enterprise (entrepreneurship) –the management, organization, and planning of the other three factors of production.

4.

What are the four vital factors of production to produce any good or service?•

8b. Factors of Production•

The four factors of production have a financial return for their part in the production process:•

9. Specialization•

Pizza Hut□

Dominos□

Chow Family□

Burger King□

KFC□

Can you list some examples of specialization?

A business which concentrates on the production of a particular good or service or a small range of products.

○

What does specialization mean?•

Individual – in a job, doctor, teacher, lawyer○

Departmental – marketing, finance, personnel○

Corporate – Dell (computers), Hilton (hotels)○

Regional – Wall Street, New York (financial services)○

National – Japan (electronics), Germany (cars), France (wines)○

At what levels does specialization occur?•

9b. Specialization•

Refers to the specialization of people.○

Defines different aspects of a job or task assigning different people to each part of the work.○

What does division of labor mean?•

Increased productivity – staff are more skilled at what they do.○

Increased efficiency – better use of resources, less time wasted.○

Standardization – same quality being produced.○

High profit margins – customers may be prepared to pay a higher price for specialist goods.○

Are there advantages to specialization?•

9c. Specialization•

Boredom – doing the same repetitive task.•

What are the disadvantages to specialization?•


Inflexibility – less flexible to adapt to different roles and responsibilities.•

A lack of autonomy – a breakdown or delay in the process will cause problems for the entire business.

•

Capital cost – the purchase and maintenance of specialist machinery and equipment may be extremely expensive.

•

Lesson 2: Business Functions•


What are the major functions of a business?

2a. Production / Operations•

Production1.

Marketing2.

Finance3.

Human Resources (Personnel)4.

What are the four vital functions that a business must have to operate effectively?•

2b. Production / Operations•

Who can give an example of this process?

The process of converting raw materials into finished goods or services, for the customer.○

What is this department responsible for?•

2c. Production / Operations•

Determine how the good or service will be manufactured or delivered.1.

Determining what resources are needed for production.2.

Planning the timescale of production.3.

Stock management and control4.

Performing quality control5.

Arranging delivery of product to customer6.

Meeting production targets and deadlines7.

Conducting research and development (R&D)8.

What are some of his/her tasks or duties?

The Production manager. J○

So…who is in charge or responsible for the production department?•

Poor planning and control may lead to a delay or halt in production and this could cost the company a lot of money.

○

The production manager’s role is a vital one.•

3a. Marketing•

They are responsible for identifying and satisfying consumer wants and needs.○

They are also responsible for making sure that the company’s products sell.○

What is the marketing department responsible for?•

How can the marketing department ensure that the firm’s products sell?•

Lesson 3: Primary, Secondary, and Tertiary Sectors.•


This is done by conducting market research, test marketing, packaging, and advertising.○

How can the marketing department ensure that the firm’s products sell?•

So…any guesses about what the major functions of the marketing department are?•

3b. Marketing•

Size,

color,

packaging,

core functions,

market research,

branding, and

product development.

Product: making sure that goods and services meet the customer's requirements1.

Depending on level of demand

Number of substitute products and

Cost of production.

Price: finding the correct pricing method to sell the product2.

The Four P’s of Marketing:•

3c. Marketing•

Using mass media; TV or newspapers.

Sales promotion

Special donations

Free samples

3. Promotion: making sure customers know about the product.

Must select the right location, location, location to distribute products to the marketplace.

4. Place: making sure goods and services are in convenient places for consumers to purchase.

The Four P’s of Marketing:•

4. Finance•

Managing the organization’s money $$$$$○

What is the finance department in charge of?•

They must ensure that accurate recording and reporting of financial documentation takes place.

○

They must comply with legal requirements.○

What must the financial manager ensure?•

5. Human Resources / Personnel•

They are responsible for managing the personnel of the organization.○

What is the human resources department responsible for?•

Workforce planning

What are they likely to deal with when managing people?•


Workforce planning○

Recruitment○

Training○

Appraisal○

Pay and benefits○

Equal opportunities○

Health and safety concerns○

Fostering working relations ○

Business Sectors•


What are the major sectors of a business?

2. Primary Sector•

The extraction, harvesting, and conversion of land.○

Agriculture, fishing, mining, forestry and oil extraction.

Using natural resources as factors of production.○

What is the primary sector involved with?•

Less economically developed countries rely heavily on farming.•

As economies develop, there is less reliance on the primary sector in terms of employment and national output.

○

In more economically developed countries, rely on machines and automation.•

3. Secondary Sector•

They are involved in using raw materials and other resources for the manufacturing of products.

○

What is the secondary sector involved in?•

Can you give an example of this?•

Construction firms○

Pharmaceutical companies○

Clothes manufacturers○

Publishing firms○

Electronic manufacturers○

Energy production companies○

What are some other businesses in this sector?•

The output is then sold to the customers.•

4. Tertiary Sector•

They are involved in providing services to their private and corporate customers.○

What is the tertiary sector involved in?•

Borrowing a book from the library, nothing is produced here, they are just offering a service.○

Can you provide an example of this?•

This sector is also know as what?•


The service sector.○

This sector is also know as what?•

Retailing○

Education○

Travel and tourism○

Entertainment○

Insurance○

Transport○

Banking and finance○

Healthcare and catering○

Can you list some examples of industries in this sector?•


1.1 nature of business activity -...

Documents