1.1 Introduction To Business Management

IB-BUSINESS
MANAGEMENT
1.1 INTRODUCTION TO BUSINESS MANAGEMENT
Class rules
 Come to class prepared

 Always try your best
 Be on time
 Be kind and fair to others
 Raise your hand before speaking
 Be respectful to the school grounds
What is a business?
 Businesses are organizations that exist to satisfy the needs and the
wants of customers using resources with the aim of making
profits.
 Needs are basic necessities for survival

 Examples: food, water, shelter
 Wants are things that people would like to have
 Examples: Steak, Fiji water, Tesla
What do businesses do?
 Identify the needs/ wants of consumers or other firms

 Purchase resources (which are inputs of the business) ( Factors
of production)
 Process the inputs to produce output
 The output of the business are the goods and services that satisfy
consumers’ needs
 Usually with the aim of making a profit
The nature of a business
Resources
 labor : the effort/ work done by people. The quality of their work depends on their skills, knowledge
and experience.
 Capital: capital goods needed to operate a business, such as machines, buildings, equipment,
vehicles.
(capital goods are used in production, consumer goods are sold to the public to meet their
needs and wants)
 land: raw materials and natural resources needed to produce goods and services.
 Enterprise: involves identifying an opportunity, starting a company, taking risks, and efficiently
using the other three inputs (often Referred to as entrepreneurship =master-mind)
products
 Products are the output of a business activity
 Goods: physical products (Ex: iPhone, iPad)

 Services: intangible products (Ex: AppleCare)
Business process and functional areas
 All businesses, from start-ups to

huge companies, are organized by 4
key functions.
 A business can gain a competitive

advantage by strategically focusing
on one or more functional areas
 Ex: if a competitive priority is to be
the lowest-cost producer, then a
business should focus on operations,
maximizing efficiency and reducing
costs by implementing smart
operation management system
Business functions
Case study on Business functions
Questions on case study
 What did Kodak do wrong?
 Lack of market research

 Slow in entering the digital photography scene
 Failed innovation and transformation
 Unwilling to change
Four Business sectors
 Primary sector
 Secondary sector
 Tertiary sector
 Quaternary sector
 The four sectors are typically linked in what is referred to as the production chain or chain of
production
 (the steps through the different sectors that have to occur in order to turn raw materials into a
consumer good that is marketed)
Primary sector
 This sector of the economy extracts or harvests products from the earth
 Activities associated with this sector includes :
 Agriculture
 Mining
 Farming
 Hunting
 Fishing
 The type of products produced by this sector have a lower value added
Secondary sector
 This sector of the economy manufactures goods for customers

 Activities associated with this sector includes:
 Metal working
 Automobile production
 Textile production
 Chemical and engineering industries
 Energy utilities
 Construction
 Ship-building
Tertiary sector
 This sector of the economy is the service industry, it provides services to the general population and
to businesses
 Activities associated with this sector includes:
 Retail and wholesale
 Transportation and distribution
 Restaurants, Tourism
 Security
 Media
 Education
 Insurance
 Healthcare
 Law
 banking
Quaternary sector
 This sector of the economy consists of industries providing information services

 such as :
 computing, ICT (information and communication technologies)
 consultancy (offering advice to businesses), R&D (research, particularly in scientific
fields)
 It is known as the knowledge-based sector of the economy

 This sector is sometimes included with the tertiary sector, as they are both service sectors
Business sectors
Challenges and opportunities in starting up a
business
 Financial challenges: entrepreneurs need to know what needs to be paid and when, and whether the
business will be able to pay it from it’s revenue or if there’s a need to ask banks for loans or credit, and
this may require a collateral.
 Marketing challenges:
 The product doesn't meet the needs/wants
 The price doesn’t align with competitors/market
 Product/brand awareness, consumers might not be aware of the brand existence
 Location of the product doesn’t match the targeted consumer
business
 Human resources challenges:

 Lack of suitable candidates or appropriate skills (can be a result of expansion cycle, so suitable labor is already
employed)
 Working conditions and salaries offered are not attractive
 Production balance: the right level of production
 If entrepreneurs are too cautious and don’t produce much, and the demand is higher than expected, there will be a supply
shortage leading to a negative impact on the business’ image
 If a business is too optimistic in its sales forecasts, this will generate excess in supply, they will have to reduce prices to
sell available stock, which will negatively affect its profit and make it difficult to survive
business
 External factors (exogenous influences):

factors that a business cant control
 Natural disasters
 Economic situation of a country/region
 Pandemic
Opportunities
 Identifying a gap in the market:

 If the business is able to meets the demands with their products, they are presented with a chance to succeed by
being the first to produce these goods and services
 Operating in niche markets:
 Niche market: A segment of a larger market with a shared identity that makes it unique
 Ex: organic food, handmade jewelry, eco-friendly products
 The market is relatively small, and with few competitors the chances of succeeding are greater if the entrepreneur
has knowledge needed regarding these G&S
 Acting as innovators: bringing innovative G&S to the market will insure the future success, whether by
innovating on existing products or creating new products
Stand up Count up
1. Choose a number
2. You have to count to that number
3. One student must stand and say the number 1
4. Then another student must stand up and say the number 2, and so on until the chosen
number
5. Any student can stand up at any time and say the next number, but if 2 students stand up
at the same time you lose and we start again from 1
6. If the class is able to get to the chosen number without 2 students standing up at the
same time then you win.

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IB-BUSINESS

 Come to class prepared

 Needs are basic necessities for survival

 Identify the needs/ wants of consumers or other firms

 Products are the output of a business activity

 Goods: physical products (Ex: iPhone, iPad)

 All businesses, from start-ups to

 A business can gain a competitive

 What did Kodak do wrong?

 Lack of market research

 This sector of the economy manufactures goods for customers

 This sector of the economy consists of industries providing information services

 It is known as the knowledge-based sector of the economy

 Human resources challenges:

 External factors (exogenous influences):

 Identifying a gap in the market:

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