Summary MNB1601 Study Pack.

MNB1601 study guidance STUDY UNIT 1: THE BUSINESS WORLD AND BUSINESS MANAGEMENT primarytask of business management:  Determine how an enterprise can achieve the highest possible output with the least possible input, or  An examination of factors methods and principles that enable a business to efficiently and productively maximize profits Needs order  Self-Realisation  Esteem Needs  Social Needs  Security Needs  Physiological needs Overlap Physical and Psychological needs may overlap The need for self-esteem affects people who has already satisfied their lower order needs Limited Resources  Natural  Human  Capital  Entrepreneurship Management The economic principle A business’s effort to provide the greatest possible need satisfaction with limited available resources Main Economic Systems  Free-Market Economy o Within the free-market economy free competition and high social costs is true. o State interfere minimum o Main driving force is profit generation  Command Economy o Centrally Directed economic system – State owns and controls the communities resources or factors of production  Socialism o socialistic system the state does own and control many of the country’s principle industries such as transportation, health services and energy Non-Profit The economic principle applies to non-profit seeking business as it does to profit seeking business. pg. 1 STUDY UNIT 2: ENTREPRENEURSHIP Entrepreneur’s traits  Achievement motivation o Actions of intense, prolonged and repeated effort to accomplish something that is different o Work single minded towards goal  Internal locus of control o A persons need to be in charge of his/her destiny o can persuade and motivate other people  Innovation and creativity’ o Conceive and create new and unique products  Risk Taking o Taking risks in one way or another The Entrepreneurial Process The entrepreneurial process involves the following phases:  Abilities and skills: o Before entering the business world, any potential entrepreneur should first clarify whether he or she has the abilities and skills to do so.  Access to resources: o Access to Capital, time, energy and other resources to launch  Opportunity: o It is also important to assess the opportunity that the entrepreneur is pursuing.  Feasibility: o Feasibility Study: Once the opportunity has been identified and defined, the entrepreneur needs to find out if it can be turned into a successful venture. After the opportunity was identified,  Business plan: o Once the entrepreneur has some certainty about the feasibility of the venture, he or she needs to compile a business plan.  Manage the business: o Once feasibility has been established and resources have been acquired, the entrepreneur launches and manages the new business. Skills required for entrepreneurship  Strategy Skill o Consider a business as a whole and to understand how it fits within its marketplace  Planning Skill o Ability to consider what the future may offer  Marketing Skill o Evaluate offerings of business and features with customer needs and wants o Pricing, Promotion, distribution of products and services  Financial Skill o Manage Money  Human Relations Skill o Leadership, people, motivational and communication pg. 2 Help Naledi to match the management skills in column A with the correct description in column B. 1. a (i) b(ii) c(v) d(iv) 2. a (ii) b(iv) c(v) d(iii) 3. a (v) b(ii) c(iii) d(i) 4. a (vi) b(iv) c(i) d(ii) Put the following steps of the entrepreneurial process in the correct order for Nathan’s Cat hotel. a Nathan had to assess the opportunity of the Cat hotel and determine whether it was a feasible idea. b Nathan had to compile a business plan in order to obtain finance from the bank. c Nathan had to launch the Cat hotel and manage the new business. d Nathan had to clarify whether he and his wife have all the abilities and skills it takes to start the Cat hotel. e Beside capital, Nathan had to determine whether they have time, energy and other resources in order to launch the Cat hotel. 1. a b c d e 2. b c d e a 3. e c d b a 4. d e a b c Which of the following is an advantage of purchasing an existingbusiness? 1. Customers are familiar with the location of the business. 2. The image of the existing business might be difficult tochange. 3. Potential liability for past business contracts. 4. Possible obsolete inventory and equipment. STUDY UNIT 3: ESTABLISHING A BUSINESS