IntroductionBusiness Management

The Role of Business

0Needs vs. Wants0Businesses aim to meet the needs and wants by:

0 Producing crops or extracting raw materials 0 Creating a product0 Providing a service

Inputs Outputs

Business Activity

human

physical

financial

enterprise

production

goods

services

Inputs Processes to add value Outputs

Business Functions

Human Resources Marketing

Finance and accounts Operations management / production

Sectors of Business Activity

Services

Goods

Quaternary

Tertiary

Secondary

Primary

• Services focused on knowledge• IT, web-based, media

• All services, sometimes manufactured products

• Finance, leisure, education etc.

• Manufacturing

• Raw materials• Extraction, mining, farming, fishing,

etc.

Chain of Production

0Read the definition of production chain on p. 60Think what primary, secondary, tertiary, quaternary

business are involved in0 Production0 Distribution0 Marketing

Sectoral Change

0The size of each sector of the economy may change0 individual, bussinesses and countries develop

0Social technologies means the social context where the business functions0 Skill level of workforce and “sophistication” of

consumers’ needs0Development of economy (moving from primary

towards quaternary sector) develops social technologies and viceversa.

Entrepreneurship & Intrapreneurship

0 Entrepreneur0 An individual who demonstrates enterprise and initiative in order to

make profit0 Intrapreneur

0 An individual employed by a large organization who demonstrates entrepreneurial thinking in the development of new products and services

0 They are both types of people who want to create a new start-up, either for a product or a whole new business

0 Innovation0 Market reading0 Need seeking0 Technology driving

Reasons to starting up a business

Interest

Independence

NecessityChallenge

Rewards

Finding a gap Sharing and idea

The process of starting up a business

1.Organizing the basics

2.Market

Research

3.Planning the

business

4.LegalIssues

5.Raising finance

6.Testing the

market

1.

1. Organizing the basics0 Where is the business going to be based?0 Name?0 What will be the legal structure?0 What will be the operational structure?0 Is there sufficient infrastucture?

0Suppliers?0Potential customers?0Government services?

1. 2.

2. Refining the business idea through market research0 The entrepreneur should do market research to

determine how the business will distinguish itself0What is the precise market segment you will target

0 How will the research be made?0 Who will be the target market?0 Can the business concept be tested?0 What will be the unique selling proposition?0 How will business communicate with market?

1. 2. 3.

3. Planning the business0 Once the concept has been narrowed a business plan

should be written0 The business plan will serve multiple stakeholders,

especially potential investors

Business Plan: A document that addresses all the

issues that need be planned before

operations may begin

1. 2. 3. 4.

4. Establishing Legal Requirements0Labour Practices0Operational Practices0Tax obligations0Licences / inspections

1. 2. 3. 4. 5.

5. Raising the finance0Convincing investors/lenders with your business plan0Who will do the accounts? Who will (external actor) make

sure they are accurate?0 Investors vs. Loan

1. 2. 3. 4. 5. 6.

6. Testing the market & Launch0Should the business start on a small scale (a pilot) to test

the consumer reaction?0What will be the pilot success criteria?0How is the business idea received by customers?

Problems new businesses face

0Organization0 Location is appropriate0 The name does not register0 Supplies are unreliable

0Market Research0 Poor research0 Wrong target market0 Weak communication channels

Problems new businesses face

0 Business Plan 0 The plan was not convincing0 Goals were to vague or contradictory

0 Legal Requirements0 Labour laws were not addressed0 Tax obligation were overlooked

0 Finance0 Raising start up capital was too difficult0 Accounts were not kept properly

0 Market0 Launch failed0 Pilot was inconclusive0 The product failed to inspire

Elements of a Business Plan

Set out the idea in the

right context

How the business will be

organized

How the business will be staffed

How the business will be

financed

How best to market

the product

How the product will be made

Elements of a Business Plan

0Starting the business – the idea0 Core idea, objectives, unique selling point etc.

0Business organization0 Location, structure, type of business, decision making,

profit sharing0HR

0 Responsibilities, rewards, what will be the HR plan, contract type

Elements of a Business Plan

0Finance0 Start-up capital where and how and at what cost,

budgets, income statements, cash-flow forecasts0Marketing

0 What market research was done, sales forecast, market segment, promotional mix

0Operations0 How is production organized, how many units will be

produced, how long will production take, potential lead time, supply chain