Business Management Overview

1.1 Introduction to Business Management

1.1.1 Business as Systems

• System Components: Input, Process, Output, Feedback
  • Inputs:
    • Physical Resources: Raw materials, semi-finished goods, capital goods
    • Financial: Funds for starting, growing, maintaining business; inventory
    • Human Resources: People running the business
• Processes:
  • Combining inputs to produce products
  • Varies by product type, sale method, employee skills, finance, labor type
  • Key Areas:
    • Human Resources: Ensures correct employee count and ethical treatment
    • Finance & Accounts: Ensures business has sufficient funds
    • Marketing: Sells products in the right way to the right audience
    • Operations: Plans and executes core activities
• Outputs:
  • Goods: Tangible products
  • Services: Intangible products
• Feedback Loops:
  • Positive Feedback: Moves system in the same direction
  • Negative Feedback: Moves system in the opposite direction
• Key Concepts: Revenue, Ethics, Sustainability, Stakeholders

1.1.2 Doughnut Economics Model

• Concept: Balances human needs and ecological limits
  • Outer Ring: Ecological ceiling, planetary boundaries
  • Inner Ring: Social foundation, human needs (food, water, housing, social aspects)
• Issues:
  • Red areas indicate overuse of earth’s systems or unmet human needs

1.1.3 The Economy

• Definition: System for producing and distributing goods/services among people
• Context: Economy is part of society, which is part of the natural environment
• Systems & Groups:
  • Households: Unpaid care services
  • State: Fundamental goods/services provided, tax-funded
  • Commons: Shared goods/services with no payment
  • Markets: Business goods/services for money
• Sectors of Economy:
  • Primary: Raw material extraction
  • Secondary: Manufacturing/processing
  • Tertiary: Service-based businesses
  • Quaternary: Knowledge and information services
• Dynamic Sector Activity:
  • Supply Chain: Steps to create products
  • Integrated Business: Operates across multiple sectors

1.1.4 Starting a Business

• Success Factors:
  • Skilled team, sufficient funding, researched marketing, efficient operations
  • Influenced by socio-cultural, technological, economic, environmental, political, legal, ethical conditions
• Analysis Tools: SWOT, STEEPLE
• Entrepreneurship:
  • Characteristics: Creative, change-driven, risk-taking
  • Actions: Understanding problems, planning solutions, action, sharing ideas
• Reasons for Starting:
  • New Business Idea, Passion for Change, Market Need, Earning a Living, Financial Reward, Control, Work-Life Balance
• Challenges:
  • Lack of Funds, Strong Competition, Market Size, Unskilled Employees, Poor Management, External Shocks
• Steps to Start:
  1. Refine Idea
  2. Prepare Business Plan
  3. Decide Legal Structure
  4. Register Business
  5. Find Location
  6. Hire Employees
  7. Get Funding
• Business Orientations:
  • Product-Oriented: Focus on R&D of specialized products
  • Market-Oriented: Focus on market needs and wants