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2 Understanding The Business Operations

This document discusses business operations and the three major functional areas of business organizations. It begins by outlining the learning objectives which are to understand business activity, identify the three functional areas, and discuss their interrelationships. It then defines business activity and objectives. The three major functional areas are identified as finance, operations, and marketing. It describes typical organization charts and how the functions overlap and work together. Examples of how different business like banks, airlines, and manufacturing apply these functions are provided.

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AYAME MALINAO BSA19
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440 views24 pages

2 Understanding The Business Operations

This document discusses business operations and the three major functional areas of business organizations. It begins by outlining the learning objectives which are to understand business activity, identify the three functional areas, and discuss their interrelationships. It then defines business activity and objectives. The three major functional areas are identified as finance, operations, and marketing. It describes typical organization charts and how the functions overlap and work together. Examples of how different business like banks, airlines, and manufacturing apply these functions are provided.

Uploaded by

AYAME MALINAO BSA19
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Mandaue City College School of Business

Understanding the
Business Operations

Business and Entrepreneurship Dept.


• Understand the Business
Activity

• Identify the three major


functional areas of
business organizations

• Discuss the
interrationship of the three
major functional areas of
business organizations
Learning Objectives
Business and Entrepreneurship Dept.
Understanding The
Business Activity
Business and Entrepreneurship Dept.
1.Provides goods and services from
limited resources to satisfy unlimited
wants.
2.Scarcity results from limited resources
and unlimited wants.
3.Choice is necessary for scarce
resources. This leads to opportunity
costs.
4.Specialization is required to make the
most out of resources Understanding The
Business Activity
Business and Entrepreneurship Dept.
1. Combine factors of production to create goods
and services.
2. Goods and services satisfy peoples wants.
3. Employs people and pays them wages so they
can consume other products.

The Business Activity


Business and Entrepreneurship Dept.
All businesses have aims or objectives to
achieve. Their aims can vary depending on their
type of business or these can change depending
on situations. The most common objectives are:

1. Profit: Profit is what keeps a company going


and is the main aim of most businesses.
Normally a business will try to obtain a
satisfactory level of profits so they do not have to
work long hours or pay too much tax.

The Business Objectives


Business and Entrepreneurship Dept.
2. Increase added value: Value added is the difference
between the price and material costs of a product.

E.g. If the price when selling a pen is P3 and it costs P1


in material, the value added would be P2.

However, this does not take into account overheads


and taxes. Added value could be increased by working
on products so that they become more expensive
finished products. One easy example of this is a mobile
phone with a camera would sell for much more than
one without it. Of course, you will need to pay for the
extra camera but as long as prices rise more than
costs, you get more profit.
The Business Objectives
Business and Entrepreneurship Dept.
3. Growth: Growth can only be achieved when
customers are satisfied with a business. When
businesses grow they create more jobs and
make them more secure when a business is
larger.

The status and salary of managers are


increased. Growth also means that a business
is able to spread risks by moving to other
markets, or it is gaining a larger market share.
Bigger businesses also gain cost advantages,
called economies of scale.
The Business Objectives
Business and Entrepreneurship Dept.
4. Survival: If a business do not survive, its owners
lose everything. Therefore, businesses need to focus
on this objective the most when they are: starting up,
competing with other businesses, or in an economic
recession.

5. Service to the community: This is the primary goal


for most government owned businesses. They plan to
produce essential products to everybody who need
them.
❑ These business objectives can conflict because
different people in a business want different things
at different times.
The Business Objectives
Business and Entrepreneurship Dept.
4. Survival: If a business do not survive, its owners
lose everything. Therefore, businesses need to focus
on this objective the most when they are: starting up,
competing with other businesses, or in an economic
recession.

5. Service to the community: This is the primary goal


for most government owned businesses. They plan to
produce essential products to everybody who need
them.
❑ These business objectives can conflict because
different people in a business want different things
at different times.
The Business Objectives
Business and Entrepreneurship Dept.
In order for products to be made and sold to the people, it must
undergo 3 different production processes. Each process is done
by a different business sector and they are:
❑ Primary sector: The natural resources extraction sector. E.g.
farming, forestry, mining... (earns the least money)

❑ Secondary sector: The manufacturing sector. E.g.


construction, car manufacturing, baking... (earns a medium
amount of money)

❑ Tertiary sector: The service sector. E.g banks, transport,


insurance... (earns the most money) Importance of a sector
in a country:
▪ No: of workers employed.
▪ value of output and sales.
Levels of Economic
Activity
Business and Entrepreneurship Dept.
Levels of Economic Activity
Business and Entrepreneurship Dept.
INPUT OUTPUT
RISK

Resources
➢Supplier PROCESS GAIN/PROFIT
➢Capital Control & Deployment and / or
➢Creditors by Effective & Efficient GROWTH
➢People Organization

UNCERTAINTY

• BUSINESS OPERATIONS, is the control and deployment of


resources to create an economic enterprise for the purpose
of gain or growth under conditions of risk and uncertainty.

BUSINESS OPERATIONS
Business and Entrepreneurship Dept.
What is operations?
– The part of a business organization that is
responsible for producing goods or services

How can we define Operations Management?


– The management of systems or processes
that create goods and/or provide services

• Operations Management affects:


– Companies’ ability to compete
– Nation’s ability to compete internationally
THE OPERATIONS MANAGEMENT
Business and Entrepreneurship Dept.
ORGANIZATION

FINANCE OPERATIONS MARKETING

It has the
most number
of personnel

Basic Functions of the Business Organization


Business and Entrepreneurship Dept.
Typical Business Organization Chart
Business and Entrepreneurship Dept.
Business Information Flow
Business and Entrepreneurship Dept.
Business Functions Overlap
Business and Entrepreneurship Dept.
Examples of Business Functions - Bank
Business and Entrepreneurship Dept.
Example of Business
Functions - Airline
2
2

Business and Entrepreneurship Dept.


Example of Business Functions - Manufacturing
Business and Entrepreneurship Dept.
Mandaue City College School of Business

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