Introduction to Business
BUS101
Emad ud Din Malik
emad@iqraisb.edu.pk
Course Objectives
 Basics of business theory.
 Context (modern & historical) of business practice.
 Impart an understanding of the various elements.
 Create an awareness of the global issues facing modern
business.
 Course outline available on line @
/teachers notes/emad/Introduction to
Business/Lecture..
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Orientation to Business
Fundamentals
• Define business?
• Perceptions of different elements of business activity.
• Purpose > why?
• Methods > how?
• Theory > what?
• Practice > when?
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Definitions….
 Price > Way of measuring value of a product by how
much the customer is willing to pay for it.
 Business model > Plan of action on how to use
resources to make a product that will increase
competitive advantage.
 Competitive advantage > Ability to offer customers a
product that has more value than other offered
products.
 Sales Revenue > The amount of money generated from
the sale of a product.
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Definitions to be familiar with
 Business > Goal directed behaviour aimed at getting
and using productive resources to buy, make, trade
and sell goods and services that can be sold at a profit.
 Productive Resources > Crucial ingredients – land,
labour, capital and enterprise – for business profit.
 Operating Costs > Cost of acquiring and using the four
productive resources to make and sell goods/services.
 Product > Any kind of a good/service that people value
and want to buy.
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Definitions….
Value > How much utility a product gives customers,
that is how well it satisfies their desires/needs.
 Profit > The total amount left over after operating
costs are deducted from revenue.
 Capital > Profit invested in the business activity of a
company.
 Wealth > The sum total of the resources, assets, riches,
and material possessions owned by people and groups
in society.
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5 concepts of note
 Different meanings of business
 Forces of supply and demand
 Business models & profitability
 Division of labour, specialization and the invisible hand
 Rationale for business organisations
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The three meanings of business.
 As commerce

process by which people produce, exchange and trade
goods/services.
 As occupation

acquired set of specialized skills and abilities that allow
creation of valuable goods/services.
 As organisation

relationship between task and authority that functions as a
coordinating & controlling element in the interactions
between groups of people working together.
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 The three dimensions of business put together form
business viewed as an integrated system.
 Combination of the three dimensions of business that
produces and distributes the goods/services that create
value for people in a society.
 Exercise: Brainstorming a visual representation of the
three dimensions of business.
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 Four types of productive resources that comprise
operational costs
 Land
 Capital
 Enterprise
 Labour
 What are operational costs?
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Market forces.
 Demand
 As price rises consumers will buy less & vice versa

Factors that increase/decrease demand?
 Supply
 As price rises producers will supply more & vice versa

Factors that increase/decrease supply?
 Market Price
 Determined by the interaction of demand and supply.

How? Diminishing Marginal Utility….
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Business models & profitability
 Companies are in business to make a profit.
 Essential basic concepts:
– Industry and
– Competitive advantage.
 Difference between profit and profitability?
 How to increase profitability?
 Ideas?
 A business model is basically how the available
resources are put to use to create competitive
advantage.
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As occupation….
 Specialization: refers to the process by which people
become more skilled and proficient (and thus
productive) when they perform a narrowly defined
range of tasks specific to a job.
 Division of labour and how it facilitates specialization.
 As opposed to being a jack of all trades and….
 What movement facilitated this trend?
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 The invisible hand of the market.
• Self-interest as a rationale for decisions.
• Competition as stimulation.
• Co-operation as necessity.
• Public Good as determiner of ends & means.
• Standard of living as necessary improvement.
• Profit sharing as indicator of productivity.
• Monopoly as an undesirable situation.
 Invisible hand means free markets are basically selfregulating .
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As organisation….
 Need for integration of activities due to increased
division of labour.
 Greater level of complexity of elements.
 Transaction costs :
 The costs of bargaining, negotiating, monitoring and
regulating exchanges between people in business.
 Teamwork :
 When people pool their skills to create more products
than they would normally be able to do alone.
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 Business Organisation :
 A tool that empowers people to shape and control the
behavior of other people to produce goods/services.
 Organisational Structure :
 The framework of tasks and authority relationships that
coordinates people so they work together toward a
common goal.
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As overall system….
 Functional Activities :
 The task-specific operations needed to convert resources
into finished goods and services sold to customers.
 Value chain :
 Coordinated sequence of functional activities necessary
to transform resources into products of value to
consumers.
 Primary & Secondary Activities.
 Ideas?
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 Tasks for students :
 Read summary of Chapter I Book II.
 Identify the business model of a chosen company.


Describe why you would (or not) like to work for this
company.
1 A4 page (not more than).
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