BF Chapter 01
BF Chapter 01
BF Chapter 01
Introduction to Business
There are many different types of organization in both the not-for-profit and business sectors.
Here are some examples of organizations, categorized as to whether they are profit-oriented or
not-for-profit.
A multinational car manufacturer (e.g. Ford)
An accountancy firm (e.g. KPMG)
A charity (e.g. UNICEF)
A trade union
A local authority
An army
A club
Why do organization Exist?
Overcome people's individual limitations, whether physical or intellectual
Enable people to specialize in what they do best
Save time, because people can work together or do two aspects of a different task at the
same time
Accumulate and share knowledge (e.g. about how best to build cars)
Enable people to pool their expertise
Enable synergy: the combined output of two or more individuals working together exceeds
their individual output ('None of us is as smart as all of us').
In brief, organizations enable people to be more productive.
How do organizations differ?
Factors Example
Private sector: owned by private investors/shareholders
Ownership (public vs private) Public Sector: Owned by the nation and managed by the
government
Activity (i.e. what they do) Manufacturing, healthcare, services (and so on)
Profit or non-profit orientation Business exists to make a profit. An army or a charity, on the other
Technology High use of technology (e.g. computer firms) v low use (e.g. corner
shop)
Differences in what organizations do ?
Industry Activity
Agriculture Producing and processing food
Manufacturing Acquiring raw materials and, by the application of labour and technology,
turning them into a product (e.g. a car)
Intellectual production Producing intellectual property e.g. software, publishing, films, music etc
Service industries These include banking, various business services (e.g. accountancy,
advertising) and public services such as education and medicine
Business: A business is an organization which aims to maximize its owner’s
wealth and it can be regarded as an entity separate from its owner.
The term business also refers to the organized efforts and activities of individuals to
produce and sell goods and services for profit. Businesses range in scale from a
sole proprietorship to an international corporation.
Profit: Is revenue less costs. It measures the creation of value, in terms of the relationship of
inputs to outputs. Profit thus integrates cost behavior and revenue performance for the whole
organization.
Mission
Goals
Non-operational Operational
/Qualitative Goals /Quantitative Goals
Aims Objectives
SMART
Vision
A vision is a vivid mental image of what you want your business to be at
some point in the future, based on your goals and aspirations. Having
a vision will give your business a clear focus, and can stop you heading
in the wrong direction.
Facebook:"bring the world closer together". Our full mission statement is:
give people the power to build community and bring the world closer together.
Amazon: Our mission is to continually raise the bar of the customer experience
by using the internet and technology to help consumers find, discover and buy
anything, and empower businesses and content creators to maximize their
success. We aim to be Earth's most customer centric company.
Our Mission
Goal
Goals: The intentions behind decisions or actions or a desired end
result. Goals give flesh to the mission. Goals are two types:
Specific
Measurable
Achievable
Relevant
Time-bound
The purpose of setting operational objectives in a business
Profitability: Cost centers and profit centers. GP, NP, Markup,ROI, ROCE.
Efficient use of resources is concerned with the economy with which resources are
used, and the effectiveness of their use in achieving the objective of the business.