Business is an organization that produce goods (physical products such as mobile phone, newspaper, etc) and services (non-physical products such as insurance, health- care, etc.) to satisfy the people needs and wants. Needs are essential goods and services for human survival such as food, water, cloth, and shelter, etc. Wants are goods and services which are not essential for human survival such as luxury house, holiday package, new PC, etc. People’s wants are unlimited. They will never be satisfied. Generally, business provide goods and services for different purposes. The reasons for business existence can be different from one business to another. Private sector businesses mainly exist for making profit; public sector businesses mainly exist for providing public services; social enterprises exist for social and environmental mission, charities exist to raise money for good causes, and sport clubs exist for providing facilities and opportunities to their members. Private sector businesses are owned privately by one individual or group of individuals. Public sector businesses are owned and run by government. Social enterprises are non-profit making organizations. In setting up the businesses, financial resources, human resources, information resources, physical resources like building, machinery, and equipment are to be used. In other words, four factors of production are required for business set up. These are land (natural resources), labour, capital (finance, machine, and equipment), and entrepreneur who organize the factors of production. People have unlimited wants but the businesses have limited factors of production to produce goods and services that will satisfy the unlimited wants of people. This leads to economic problem of scarcity. Because of the scarcity problems, every people and businesses have to make choice. All choices involve giving up something. The next best alternative giving up by choosing another item is opportunity cost for businesses and people. To achieve the business objectives, a number of business functions are carried out. Examples are production/operation, marketing, human resources, finance, research & development, procurement, etc. There are two types of goods and services; consumers goods and producer goods. Consumer goods are sold by business to ordinary people (individual consumers) rather than businesses. These are the goods finally used by the consumers to satisfy their needs and wants. Examples are mobile phone, magazines, van, dental care, hair-dressing, etc. Producer goods sold by one business to another. These are used to produce more goods and services or continue the process of production. Examples are tractor, tools and equipment, raw materials, market research, web design, etc. All the businesses have stakeholders who are any individual or group which has an interest in the business for various reasons. Why stakeholders are important for businesses? Stakeholders are important for businesses since they can either affect or be affected by the business. Stakeholders’ reactions can have some impact on the business. For example, if the businesses fail to meet their wants, shareholders would sell their shares, customers would stop their purchasing, employees would quit their job, managers would reduce their effort, suppliers would stop their suppliers, government would regulate the businesses, community would criticize the businesses. In fact, stakeholders and businesses are mutual dependent on each other. Businesses need to understand who are their stakeholders and what are their wants. • Owners are those who have financial stake, invested their time and money in the business and responsible for setting up and running the business. Owners want the business’s profit, growth, increase in value of business. • Customers are those who buy the goods and service from the business. They want the safe products, high quality and fair price, value for money, reliability of services. • Employees are those work for business and paid salaries; they want high salaries, job security, job satisfaction, training, good working conditions. • Managers are those who help to run the business in an effective and efficient manner. Their main roles are planning for the future direction of the business, organizing the necessary resources for the business, leading the different departments, solving the problems there, motivating the employees, and controlling the resources to achieve the business objectives. They are accountable to owners and responsible for the success and failures. They want high salaries, job security, growth of business so they get more power, status, and salary. • Financiers are those who lend money to a business. They may be banks or family members, private investor, venture capitalist. They want their loan repayment in time, interest payment as in the contract. • Suppliers are those who provide raw materials, parts and components, commercial services, utilities to the business. They want prompt payment, regular order, large order by the business. In turn, businesses want the good quality and fair prices from their suppliers. • Local Community would get benefits from the success of the business such as employment opportunity, job security, higher pay. On the other hand, businesses may be criticized if they cause environmental pollution (water, air, noise, etc.) • Governments are interested in the businesses because they can provide employment for public, taxes for government spending, and wealth for the country. All businesses are operating in changing business environment. Therefore, they may be affected by changes in external factors such as the strength of competition, economic recession, new legislations, population trends, world affairs, and demand pattern. If the businesses face the strong competition by the global businesses, they have to change their business objectives, strategies, and methods. If the businesses face the decline in demand for the current product, they have to develop the new product to keep the business.
