Understanding

Business
Part 2
UGB123
Lecturer: Kumar
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Introduction to Business
A business is any activity that provides goods
or services to consumers for the purpose of
making a profit (Revenues less Expenses).
Ex: Intel, Samsung and Apple produces and sells
goods (computers, smartphones, etc.) whereas banks,
hospitals, airline companies etc provide services.
Many companies provide both goods and services
(Proton that sells cars and also provide automobile
maintenance services).
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Introduction to Business
Some organizations are not set up to make
profits. Many are established to provide social,
educational or charity services. Such notfor-profit (or non-profit) organizations
include the Red Crescent Society, SPCA, etc.
Most of these organizations, however, function in
much the same way as a business. Thus, most of the
business principles introduced in this text also apply
to nonprofits.
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Objectives of Business
Survival

Growth

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Profit

Social
Responsibility

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Businesses add to the standard of

living and quality of life
1. Entrepreneurs (a person who risks time and
money to start and manage a business)
provide employment for others.
2. They also pay taxes that are used for schools,
hospitals, and other facilities.
3. Businesses are a part of an economic system
that helps to create a higher STANDARD
OF LIVING and QUALITY of LIFE for
everyone.
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Businesses add to the Standard of

Living and Quality of Life
The term STANDARD OF LIVING refers to
the amount of goods and services people can
buy with the money they have.

QUALITY OF LIFE refers to the general

well-being of a society in terms of political
freedom, a clean natural environment,
education, health care, free time, and
everything else that leads to satisfaction and
joy.
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Functional Areas in Business

The activities needed to operate a business can
be divided into a number of functional areas:

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Management

Management involves planning, organizing, staffing,

directing, and controlling a companys resources so
that it can achieve its goals.
Managers plan by setting goals and developing
strategies for achieving them.
They organize activities and resources to ensure that
business goals are met.
They staff the organization with qualified employees
and direct them to accomplish business goals.
Finally, managers design controls for assessing the
success of plans and decisions.

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Understanding Business

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Operations

All companies must convert resources (labour,

materials, information) into goods or services.
Some companies, such as Apple, convert resources
into tangible productsiPhones, iPods, Macs.
Others, such as hospitals, convert resources into
intangible productshealth care.
The Operations Manager designs and oversees the
transformation of resources into goods or services.
This individual is also responsible for ensuring that
products are of high quality.

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Understanding Business

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Marketing

Marketing consists of everything that a company

does to identify customers needs and design
products to meet those needs.
Marketers develop the benefits and features of
products, including price and quality.
They also decide on the best method of delivering
products and the best means of promoting them to
attract and keep customers.
They manage relationships with customers and
make them aware of the organizations desire and
ability to satisfy their needs.

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Understanding Business

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Accounting & Finance

Accounting:
Managers need accurate, relevant, timely financial
information, and accountants provide it.
Financial accounting involves preparing financial
statements to help users, both inside and outside the
organization, assess the financial strength of the
company.
Management accounting involves preparing
information, such as reports on the cost of materials
used in the production process, for internal use only.
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Accounting & Finance

Finance:
Finance involves planning for, obtaining, and
managing a companys funds.
Finance managers addresses the questions below:

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How much money does the company need?

How and where will it get the necessary money?
How and when will it pay the money back?
What should it do with its funds?
What investments should be made in plant and
equipment?
How much should be spent on research and
development?
How should excess funds be invested?
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Understanding Business

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Human Resources

The Human Resource Manager acts as advisory

capacity and work with other line managers to
resolve issues related to HR.
Human Resource manager is responsible for:

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Workforce Planning
Job Analysis and Design
Recruitment/Selection
Training and Development
Health and Safety
Employee Relations
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Understanding Business: HRM

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Participants in a Business

Every business must have one or more owners whose

primary role is to invest money in the business.
When a business is being started, its generally the
owners who polish the business idea and bring
together the resources (money and people) needed to
turn the idea into a business.
The owners also hire employees to work for the
company and help it reach its goals.
Owners and employees depend on a third group of
participantscustomers. Ultimately, the goal of any
business is to satisfy the needs of its customers.

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Business Environment
External environment everything outside
an organizations boundaries that might
affect it.
General/Macro environment
Task/Micro environment
Internal environment the conditions and
forces within an organization.
Not all parts of the environment are equally
important to all organizations.
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Organization
& its
Environment
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Forms of Business Ownership

Sole Proprietorship - A business owned and
managed by one individual; the business and
the owner are one and the same in the eyes of
the law.
Partnerships - An association of two or more
people who co-own a business for the
purpose of making a profit.
Corporations - A separate legal entity apart
from its owners which receives the right to
exist from the state in which in which it is
incorporated.
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