BUSINESS
MANAGEMENT
Unit 1 – Introduction to
Business Management
Alexia Puig Bello
, Alexia Puig Bello
INTRODUCTION TO BUSINESS
MANAGEMENT
1.1 WHAT IS A BUSINESS?
A business can be defined as a decision-making organization established to produce goods and/or provide
services.
Factors of production: Human, physical and financial resources combined in an effective way to produce goods
and services.
• Land: Natural resources needed to produce goods and services.
• Labour: Human effort to produce goods and services.
• Capital: Non-natural resources used in the production process.
• Entrepreneurship: Knowledge, skills and experiences of individuals who have the capability to manage
the overall production process.
Businesses produce new goods and services for numerous reasons including new tastes and preferences of
customers, changes in technology, and some goods and services becoming obsolete.
To stay competitive businesses may also introduce new goods or services or adapt existing products to fill gaps
in the market.
Customers: People or other businesses that purchase goods and services.
Consumers: People who use goods and services. They are not necessarily customers.
Adding value: Process of producing a particular good or service that is worth more than the cost of the resources
used to produce it.
Factors of production: Collective term for the resources needed to produce goods and services. Businesses
combine human, physical and financial resources in an effective way to create goods and services to meet the
needs and wants of consumers.
Goods: Physical products, such as food, clothes, cars, furniture, smartphones…
Services: Intangible products, such as haircuts, tourism, education, banking, healthcare…
FUNCTIONS OF BUSINESS
In order to provide goods or services, businesses carry out a number of functions:
• Human resources: Function that handles all aspects relate to the workforce. It involves all aspects of
business operations related to staff within an organization. It must also comply with legal aspects of
the external business environment (laws about minimum wages, working hours, gender equality…).
Recruitment of staff, Hiring a new production manager, Financial and non-financial methods of
motivation of staff
1
, Alexia Puig Bello
• Finance and accounts: Refers to the responsibility for ensuring that the business has sufficient funds in
order to conduct its daily operations. They manage the money and maintain accounts accurate of the
firm’s funds.
Allocating resources to purchase capital equipment.
• Marketing: It’s about identifying the needs and wants of customers so that the business can provide
goods and services to meet these requirements and desires, usually in a profitable way.
Marketing activities include:
- Market research to discover the products that the costumers want, in an ever-changing and
dynamic business
- Determining appropriate pricing methods to sell the products.
- Promotion to inform and persuade customers about buying the products.
- Distributing the products to customers efficiently.
Setting prices for the firm’s products, Deciding where a product should be sold, Researching the needs,
wants and preferences of customers, Strategies to attract and retain customers.
• Operations management: Is the process of making goods and providing services from the available
resources of a business to meet the needs and wants of its customers. It involves ensuring that gods
and services meet production targets, deadlines and certain quality standards.
Stock (inventory) control and management, Establishing quality management processes
All four of these functions are interdependent.
SECTORS OF ECONOMY
PRIMARY SECTOR
Refers to business activity involved with the extraction of natural resources. Also known as extractive
production.
For example, metal ores and coal have to be mined, oil and natural gas have to be drilled from the ground,
rubber needs to be extracted from trees, fish need to be trawled…
It’s the predominant sector in less economically developed countries or low-income countries.
It accounts for the majority gross domestic product (GDP) and employment in these countries.
The added value of primary sector output is relatively low.
SECONDARY SECTOR
Refers to business activity involves with the manufacturing of construction of finished products. It encompasses
transforming primary sector output into finished gods, ready to sell to costumers.
- Car manufacturing
- Carpentry
- Construction
- Oil refining
- Tailors and dress makers
2
, Alexia Puig Bello
Secondary sector output is the predominant sector in economically developing countries (or middle-income
economies).
It accounts for the majority of GDP and employment in these countries or states.
TERTIARY SECTOR
Refers business activity that involves providing services to customers, consumers and business clients.
Tertiary sector output is the predominant sector in economically developed countries (or high-income
economies)
- Advertising
- Banking
- Education
- Medicine
- Real estate
- Legal services
The added value of the tertiary sector output is very high.
QUATERNARY SECTOR
Refers to business activity involving he creation or sharing of knowledge and information. It involves using digital
information technologies.
The added value is extremely high in the quaternary sector.
- Information and communications technology (ICT)
- Management consultancy
- Online educational providers
- Research and development (R&D)
- Software and ‘app’ developers
ENTREPRENEURSHIP
Describes the traits of individuals who run their own business.
A visionary is an entrepreneur who has the foresight and driving force behind an organization’s growth and
development. S/he can see market changes and trends before they actually happen or materialize, or even set
the trends themselves.
Common characteristics and skills of an entrepreneur:
- Creativity - Planner
- Decisiveness - Risk tolerance
- Effective communicator - Teamwork
- Leadership - Vision
3
MANAGEMENT
Unit 1 – Introduction to
Business Management
Alexia Puig Bello
, Alexia Puig Bello
INTRODUCTION TO BUSINESS
MANAGEMENT
1.1 WHAT IS A BUSINESS?
A business can be defined as a decision-making organization established to produce goods and/or provide
services.
Factors of production: Human, physical and financial resources combined in an effective way to produce goods
and services.
• Land: Natural resources needed to produce goods and services.
• Labour: Human effort to produce goods and services.
• Capital: Non-natural resources used in the production process.
• Entrepreneurship: Knowledge, skills and experiences of individuals who have the capability to manage
the overall production process.
Businesses produce new goods and services for numerous reasons including new tastes and preferences of
customers, changes in technology, and some goods and services becoming obsolete.
To stay competitive businesses may also introduce new goods or services or adapt existing products to fill gaps
in the market.
Customers: People or other businesses that purchase goods and services.
Consumers: People who use goods and services. They are not necessarily customers.
Adding value: Process of producing a particular good or service that is worth more than the cost of the resources
used to produce it.
Factors of production: Collective term for the resources needed to produce goods and services. Businesses
combine human, physical and financial resources in an effective way to create goods and services to meet the
needs and wants of consumers.
Goods: Physical products, such as food, clothes, cars, furniture, smartphones…
Services: Intangible products, such as haircuts, tourism, education, banking, healthcare…
FUNCTIONS OF BUSINESS
In order to provide goods or services, businesses carry out a number of functions:
• Human resources: Function that handles all aspects relate to the workforce. It involves all aspects of
business operations related to staff within an organization. It must also comply with legal aspects of
the external business environment (laws about minimum wages, working hours, gender equality…).
Recruitment of staff, Hiring a new production manager, Financial and non-financial methods of
motivation of staff
1
, Alexia Puig Bello
• Finance and accounts: Refers to the responsibility for ensuring that the business has sufficient funds in
order to conduct its daily operations. They manage the money and maintain accounts accurate of the
firm’s funds.
Allocating resources to purchase capital equipment.
• Marketing: It’s about identifying the needs and wants of customers so that the business can provide
goods and services to meet these requirements and desires, usually in a profitable way.
Marketing activities include:
- Market research to discover the products that the costumers want, in an ever-changing and
dynamic business
- Determining appropriate pricing methods to sell the products.
- Promotion to inform and persuade customers about buying the products.
- Distributing the products to customers efficiently.
Setting prices for the firm’s products, Deciding where a product should be sold, Researching the needs,
wants and preferences of customers, Strategies to attract and retain customers.
• Operations management: Is the process of making goods and providing services from the available
resources of a business to meet the needs and wants of its customers. It involves ensuring that gods
and services meet production targets, deadlines and certain quality standards.
Stock (inventory) control and management, Establishing quality management processes
All four of these functions are interdependent.
SECTORS OF ECONOMY
PRIMARY SECTOR
Refers to business activity involved with the extraction of natural resources. Also known as extractive
production.
For example, metal ores and coal have to be mined, oil and natural gas have to be drilled from the ground,
rubber needs to be extracted from trees, fish need to be trawled…
It’s the predominant sector in less economically developed countries or low-income countries.
It accounts for the majority gross domestic product (GDP) and employment in these countries.
The added value of primary sector output is relatively low.
SECONDARY SECTOR
Refers to business activity involves with the manufacturing of construction of finished products. It encompasses
transforming primary sector output into finished gods, ready to sell to costumers.
- Car manufacturing
- Carpentry
- Construction
- Oil refining
- Tailors and dress makers
2
, Alexia Puig Bello
Secondary sector output is the predominant sector in economically developing countries (or middle-income
economies).
It accounts for the majority of GDP and employment in these countries or states.
TERTIARY SECTOR
Refers business activity that involves providing services to customers, consumers and business clients.
Tertiary sector output is the predominant sector in economically developed countries (or high-income
economies)
- Advertising
- Banking
- Education
- Medicine
- Real estate
- Legal services
The added value of the tertiary sector output is very high.
QUATERNARY SECTOR
Refers to business activity involving he creation or sharing of knowledge and information. It involves using digital
information technologies.
The added value is extremely high in the quaternary sector.
- Information and communications technology (ICT)
- Management consultancy
- Online educational providers
- Research and development (R&D)
- Software and ‘app’ developers
ENTREPRENEURSHIP
Describes the traits of individuals who run their own business.
A visionary is an entrepreneur who has the foresight and driving force behind an organization’s growth and
development. S/he can see market changes and trends before they actually happen or materialize, or even set
the trends themselves.
Common characteristics and skills of an entrepreneur:
- Creativity - Planner
- Decisiveness - Risk tolerance
- Effective communicator - Teamwork
- Leadership - Vision
3
