unit 1.1: nature of business activity~ b&m

intrapreneur

-is an employee who thinks and acts as an entrepreneur within a sector of an organization. -s independent, proactive, creative, and generates new ideas and innovations to the organization.

factors of production

-to produce a good or service, resources must be used. These resources are called factors of production. -Factors of production are the four types of inputs necessary for the production process. -land -labor -capital -entrepreneurship

autonomy

Ability to set rules and policies.

security

More job security than working for someone.

labor

Physical/mental effort used in production of a product.

Secondary Sector (processes)

Processing raw materials into finished products -Ex: manufacturing paper, clothing, etc.

tertiary sector

Retail stores that sell product to final consumers.

Tertiary Sector (outputs)

Service industries -Ex: leisure, transport, finance, communications

growth

The ability to start small and grow the business.

hobbies

The ability to turn a hobby into an occupation.

secondary sector

The manufacturing companies who bring together sugar, cocoa and raw materials to manufacture chocolate products.

earnings

The potential return on investment may far outweigh the risk.

Reasons For Starting Up a Business

There are many different reasons why entrepreneurs start a business: -growth -earnings -transference -challenge -autonomy -security -hobbies

Non-renewable resources

cannot be replaced once consumed

The Main Functions of Business

for a business to operate effectively, tasks must be carried out by functional areas. These interdependent functional areas are: -human resources (personnel) -fiance and accounting -marketing -operations

Entrepreneurship

is an individual who plans, organizes, and manages a business, taking on financial risks.

executive summary

is an overview of the business and highlights the key points and conclusions. It is included at the beginning of the business plan.

Quaternary sector

is involved in intellectual, knowledge-based activities that generate and share information. -Ex: Research & Development (R&D)

Primary Sector (inputs)

raw materials from the earth -Ex: mining, fishing, agriculture, forestry

marketing

responsible for identifying and satisfying consumer wants and needs (4Ps).

Human Resources (Personnel)

responsible for managing the personnel of the organization.

operations

responsible for the process of converting raw materials into finished goods.

contingency plan

which outlines what the entrepreneur will do in case something goes wrong with the business.

Problems A New Business May Face

-Lack of finance -Cash flow problems (working capital) -Marketing problems -Unestablished customer base -People management problems -Legalities -Production problems (forecast levels of demand) -High production costs (cost of machinery, etc) -Poor location -External influences (oil crisis, recession, etc)

Nature of Business Activity

-A business is a decision making organization involved in the process of using inputs to produce products (goods and/or services). -Inputs are the resources that a business uses in the production process (labor, raw materials). -This process generates outputs (goods, services). --Goods are physical products (tangible) --Services are intangible products

The Elements of a Business Plan

-A business plan SHOULD have a section devoted to a SWOT analysis. -A business plan MUST also contain a contingency plan -executive summary

Business Sectors

-Businesses can be classified according to the stage of production they are engaged in. -Primary Sector (inputs) -Secondary Sector (processes) -Tertiary Sector (outputs) -Quaternary sector

Steps in the Process of Starting a Business

1. Write a business plan -Officially formulate the business idea -Include goals and objectives of the new business 2. Obtain start-up capital -Personal savings, loans, investors, etc. 3. Obtain business registration -Obtain proper licenses and registration from state 4. Open a business bank account -Separate from personal bank account 5. Marketing -Advertise and promote product/service

challenge

Drives certain people to perform and achieve personal satisfaction.

primary sector

Farmers who grow and harvest the cocoa beans.

transference

Inheriting a family business that has become a family tradition.

Finance and Accounting

Manages organization's money.

capital

all non-natural resources that are used in the creation and production of other products (money, buildings, tools).

chain of production

is the sequence of activities and processes required to convert raw materials and components into consumer goods and services and to deliver them to the consumer.

Entrepreneurship

management, organization, and planning of the other factors of production.

Renewable resources

replenish themselves (fish, water, etc).

land

All natural resources that are available for production. -Ex: trees, water, fish, minerals, and physical land itself. -renewable resources -non-renewable resources