1 INTRODUCTION
2 NEED SATISFACTION
3 BUSINESS MANAGEMENT FIELD OF STUDY
4 BUSINESS ENTERPRISE AND OPERATING UNIT
5 BUSINESS MANAGEMENT AS A SCIENCE
6 BUSINESS MANAGEMENT VE ECONOMICS
7 FACTORS OF PRODUCTION
8 FUNCTIONAL APPROACH
9 SYSTEMS APPROACH
10 STUDY UNIT REVIEW
11 APPLICATION QUESTIONS
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INTRODUCTION
Primary field of study: establishment and management of businesses
Business Management: principles by which businesses are managed to achieve objectives successfully
Entrepreneurs driving force behind economic progress businesses = firms = enterprises
NEED SATISFACTION
Motive drive satisfying needs
Maslow’s hierarchy of needs
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NEED SATISFACTION
To satisfy needs: scarce resources required
Scarce resources = factors of production (FOP)
Businesses perform conversion processes to create products and services from these four factors of production: inputs outputs
Economic problem: unlimited/various needs BUT limited/scarce resources (FOP)
Economic motive: the drive to satisfy needs by acquiring products and services
Economic principle: (how is this to be done) to achieve the highest possible output of products and services to satisfy needs by using the lowest possible inputs (scarce FOP/ limited resources)
Minimise input ; maximise output
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BUSINESS MANAGEMENT – FIELD OF STUDY

Business management as a science

Free market system and profit motive

What a business is

How a business is established and managed

The role of entrepreneurs in establishing and managing a business in the free market system

The business functions performed in an enterprise to deliver the required products and services to customers
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BUSINESS ENTERPRISE AND OPERATING UNIT
ENTERPRISE
 independent economic entity
 legal entity for certain forms of business enterprises
 continuity
 own decisions
 accepts risks, uncertainty, rapid change
 profitable use of factors of production
 remunerates factors of production
 uses operating unit to achieve goals and objectives
TYPES OF ENTERPRISES
Private enterprises, public corporations, non-profit enterprises
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BUSINESS ENTERPRISE VS OPERATING UNIT
OPERATING UNIT
 physical, visible production unit
 transformation (conversion) process takes place
 production of products and provision of services
 found in every economic system
 in free market system its survival depends on business enterprise
 not just a factory, may be a shop, store, warehouse, bank branch, restaurant, etc.
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BUSINESS ENTERPRISE VS OPERATING UNIT
PLANT
HUMAN ELEMENT
OPERATING UNIT (ESTABLISHMENT)
ALL OTHER BUSINESS FUNCTIONS
ENTERPRISE
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BUSINESS MANAGEMENT AS A SCIENCE
 body of knowledge
 proved through observation, experimentation and/or logical argument
 theories not yet proven wrong
 theories formulated in Business Management relate to the establishment and management of businesses
 object of study/empirical object
Q: what is observed/studied?
A: business enterprise and its operating unit(s)
 problem statement/angle of investigation/cognitive object
Q: what is the angle of investigation/viewpoint to be researched?
A: maximisation of the rate of return on capital invested
 applied/practical science
 normative science – providing guidelines/principles
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BUSINESS MANAGEMENT VS ECONOMICS
BUSINESS MANAGEMENT ECONOMICS
Private business enterprises concerned about customer need satisfaction and pursuit of rate of return through means of production, eg., income generation of enterprise and its operating unit
Problem statement:
Economic principle
Concerned about need satisfaction in the national economy as a whole, eg., income generation, income distribution and income expenditure for the economy as a whole
Problem statement:
Economic principle
Object of study: business enterprises – establishment and management
Object of study: total economy – economic phenomena
Smaller field of study: mainly concerned about economic processes within an enterprise 11

FACTORS OF PRODCUTION/SCARCE RESOURCES (4)
 Natural resources: occur naturally in earth’s environment land including agriculture, minerals, forests, wind/water energy, fruits of the sea

Human resources: physical and mental effort workforce and working population
 Capital: ownership of the enterprise’s assets machinery, equipment, funds

Entrepreneurship: driving force bear all the risks, enjoy all the spoils
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SYSTEMS APPROACH

The systems approach assumes that all businesses comprises of interdependent parts that can only be understood by reference to the whole. As such, a business may be analysed in terms of inputs, processes and outputs.
 synergetic principle
 open or closed
 every effort to achieve objective(s)
 all systems are subsystems
 open systems more complex
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