Introduction to Business Management
Reasons for starting up in Business?
The main reason to why people want to start up a business is for the money. It is to be said that you will make more
money when you are working for yourself rather than for somebody else. Over the LT, you will most likely earn
much more money that runs through the business of your own.
Secondly, there are just some people who simply hate working for somebody else a.k.a under them. There may be
people who hate the idea of having a boss above them and must obey the rules according to them. Therefore, these
people may be best suitable to run their own business and having a job that they exactly know what to do. You will
get to work towards something that belongs to you entirely.
What is a Business Plan?
A business plan is straight up, a guide for your business that outlines the needed expectations and details on how to
achieve them. It helps you allocate resources properly and make the right decisions. A business plan is crucial
because it provides specific and organised information about your company, also on "how you will repay borrowed
money" because any type of loan package is considered important in a good business plan.
Those who wants to see a business plan may be sales personnel or suppliers as it informs them about your operations
and goal. An investor may also search for a good business plan for consideration for investment. They might expect
a) an experienced team, b) believable exits (whether the money coming out of the company invested will go back
into the bank account) c) Real growth prospects d)Real planning.
Problems that a new enterprise may face.
Note that the speed of economic and technological changes to the world may be unpredictable therefore the right
path yesterday may not work for today, and even disastrous by tomorrow.
1.
Cash, Borrowing and Resource Management

Cash flow --> a healthy profit. Therefore, if capital expenditures are draining your cash, it is a sign that the
business is in risk. In order to avoid these, businesses must store up cash to meet the obligations needed to
handle any emergencies. Cash restrictions can be the biggest factor that may limit growth and overtrading
to be fatal.

It is crucial to make the best of your finances, because it is a key opportunity to assess new right set of
circumstances.

Effective credit management and tight control of overdue debts.

Good stock and effective supplier management

Planning ahead (to anticipate your financing heeds)
2. Keeping up with the market

Business conditions change continually, therefore your market research should be continuous as well.

Can easily lead to business/market failure (out-of-date information...etc)

More you succeed = more competitors will notice you

Important to invest in innovation to build new profitable profits to market (to maximise overall
profitability)

Your own experiences may be more valuable (useful insights)

Continually watch the customers' purchasing behaviour and preferences.

Analyse key info on the customer's reaction to a new product.
3. Skills and Attitudes

May need outsiders for help as business grows

Must learn to listen, take advices of people, to be a successful entrepreneur.
Primary Sector
The primary sector of the economy is the sector of an economy making direct use of natural resources. This
includes agriculture, forestry, fishing and mining.
Secondary Sector
Secondary industries are those that take the raw materials produced by the primary sector and process them
into manufactured goods and products.
Tertiary Sector
The tertiary sector is also called the service sector and involves the selling of services and skills. They can also
involve selling goods and products from primary and secondary industries.
Quaternary Sector
The quaternary sector consists of those industries providing information services, such as computing, ICT
(information and communication technologies), consultancy (offering advice to businesses) and R&D (research,
particularly in scientific fields).
The quaternary sector is sometimes included with the tertiary sector, as they are both service sectors. The tertiary
and quaternary sectors make up the largest part of the UK economy, employing 76 per cent of the workforce.
<source: http://www.bbc.co.uk/schools/gcsebitesize/geography/economic_change/characteristics_industry_rev1.sht
ml>
The main functions of business
1. Human resources

The HR department is responsible for managing the personnel of the organization

In managing people, the HR department is likely to deal with the following issues:
o
workforce planning, recruitment, training, appraisal, dismissals and redundancies, and outsourcing
human resource strategies
2. Finance and accounts

This department is in charge of managing the organization’s money

The finance and accounts director must ensure that accurate recording and reporting of financial
documentation takes place
o
To comply with legal requirements

(e.g. to prevent deliberate understating of profits to avoid corporate taxes)

To inform those interested in the financial position of the business (such as shareholders
and potential investors)

Finance and accounts topics are covered in Units 3.1-3.9
3. Marketing

Responsible for identifying and satisfying the needs and wants of customers

In charge of ensuring that the firm’s products sell

Done through a series of activities such as:
o

market research, test marketing, advertising and branding
Functions of the marketing department can be summed up as the traditional four Ps of marketing
o
a) Product

Ensuring that goods and services meet the customer’s requirements


A product’s various sizes, colours, packaging and core functions
Other roles related to the product include product differentiation
and product position mapping
o
b) Price

Using various pricing strategies to sell the products of a business

Numerous pricing strategies can be used, depending on factors such as the level of
demand, the costs of producing the good or service, and the number of substitute products
available
o
c) Promotion

Making sure that customers know about the firms products

This is often done through the mass media


e.g. television and newspaper advertising
Alternatively, cheaper methods include the use of sales promotions, social networking
and guerrilla marketing
o
d) Place

Ensuring that goods and services are available in convenient places for consumers to buy

Marketing managers must ensure that they select appropriate ways to distribute
products to the marketplace

e.g. online purchases, retail outlets, vending machines
4. Operations

Also known as operations management or production

Functional area of an organization is responsible for the process of converting raw materials and
components into finished goods
o

Examples of production include:
o

Ready for sale and delivery to customers
The extraction of crude oil, car manufacturing and the construction of roads
Operations also applies to the process of providing services to customers as in the case of hotels,
restaurants, beauty salons and financial institutions

Operations topics are covered in Units 5.1-5.7