03/05/2014

iAcademy iAcademy

Agenda
Introduction to business • Introduction to your Instructors
& Economic environment • Introduction to the Module
• Week 1 Lecture Coverage
Introduction to Business
– Satisfying needs and wants
Lecture 1
– Economic choices
– Economic system
Introduction and Overview of Module
– Demand and supply
Introduction to business and economic foundation
This lecture and its associated materials have been produced by Mr. Ittipat Limpamont (MSc International Finance,
University of Leeds) of iAcademy for the purposes of lecturing on the above described subject and the material should
be viewed in this context. The work does not constitute professional advice and no warranties are made regarding the
information presented. The Author and iAcademy do not accept any liability for the consequences of any action taken
as a result of the work or any recommendations made or inferred. Permission to use any of these materials must be
first granted by iAcademy.
iAcademy iAcademy

iAcademy iAcademy

Module Leader Introduction to the Module

• Ittipat Limpamont • Module Leaders
(MSc International Finance, University of Leeds) – Who is teaching you?
– Visiting Lecturer
• Overview of Module
• Sukhothai Thammathirat University
• BBA, BE subjects in Financial management, Business – What can you expect?
Strategy, Entrepreneurship,… etc.
• Teacher Assistant, BBA program, University of Exeter
• Learning Objectives
– Manager / Analyst – How will you benefit?
• Maersk Line • Learning Strategy
• Six Senses Resorts and Spas Consultancy services
• PTT Plc
– How you will learn?
• Assessment Overview
– How you will be tested?
iAcademy iAcademy

1
 03/05/2014

iAcademy iAcademy

Overview of Module Overview of Module

• Introduction to Business Business Foundations Specific Business Areas*

• Aim: provides a basic knowledge in a wide Introduction to business: Operation Management

scope of business areas for students to use as a • What a business is, how it operates,
foundation to advance their knowledge in and how it is managed. Management
• Forms of business ownership
several modules at the Diploma and Higher • Key business departments and their Marketing
Diploma levels including management, roles, responsibilities and operations;
marketing, finance, human resource, etc. departments such as production,
marketing, finance, human resources Accounting & Finance
and management.
• financial literacy and personal finance
Human Resources
management

* Specific business subjects will be introduced in undergraduate level and will not be included in this module.
iAcademy iAcademy

iAcademy iAcademy

Learning Objectives Learning Strategy

• Demonstrate an understanding of business activity and • Taught over 1 academic semester
how it relates to economic environment
• Total 12 weeks of class
• Identify characteristics of successful entrepreneurs and
basic elements to start a small business. • Each week consists of 1 Lecture (2 Hours) and 1
• Understand basic concepts of each business areas:
tutorial (2 Hours)
– Marketing – Lecture: Learn business knowledge and its
– Operations
implications
– Human resources – Tutorial: Review and put knowledge into practices
– Accounting & Finance through group discussions, exercises and case
studies.
• Understand and manage their own personal finance
and choices of investment.
iAcademy iAcademy

2
 03/05/2014

iAcademy iAcademy

Learning Strategy Learning Strategy

Week Content
Week 1 Introduction to business and economic environment
Week 2 Business in the global economy Attendance for all classes is
Week 3 Social responsibility of Business and Government
Week 4 Business organization important!
Week 5 Entrepreneurship and small business management
Week 6 Management and Leadership • Understanding the concepts is more important
Mid-term exam (2 hours) than memorizing everything.
Week 7 Production and business operations
Week 8 Introduction to Marketing • Using examples is the effective way to
Week 9 Human resources understand the business concepts.
Week 10 Financial management and accounting
Week 11 Personal finance and investment
Week 12 Revision & Exam preparation
Final exam (2 hours)
iAcademy iAcademy

iAcademy iAcademy

Assessment Details Assessment Details

• Introduction to Business • Module Grading Standards in the UK
• 2 Assessments (Mid-term & Final exams) Range of
Grade Remarks
Marks
• All assessments on an individual basis Excellent: outstanding performance with only minor
70 - 100 A
• Mid-term exam (50%) errors
Very Good: above the average standard but with
– Knowledge from week 1 – 6 60 - 69 B
some errors
• Final exam (50%) Good: generally sound work with a number of
50 - 59 C
– Overall knowledge of the entire module with a focus notable errors
43 - 49 D Satisfactory: fair but with significant shortcomings
on second half of the module
40 - 42 E Sufficient: performance meets the minimum criteria
Fail: performance does not meet the minimum
0 - 39 F
criteria and considerable further work is required
iAcademy iAcademy

3
 03/05/2014

iAcademy iAcademy

Assessment Details Any Questions?

More Information about the 1st

assessment will be provided in
Week 6.

iAcademy iAcademy

iAcademy iAcademy

Let’s get started with Lecture 1 What is Business?

• Play video
– What Is Business? (1948)

What is Business?

An Introduction to business
& Economic environment
iAcademy iAcademy

4
 03/05/2014

iAcademy iAcademy

An Introduction to business & Economic An Introduction to business & Economic

environment environment

• Satisfying needs and wants • Satisfying needs and wants

• Economic choices • Economic choices
• Economic system • Economic system
• Demand and supply • Demand and supply

iAcademy iAcademy

iAcademy iAcademy

What is the difference between needs and wants?

• “Needs are essential.”

Why do we need to do the – Things that are required in order to live are known as needs.
– Food, water, clothing, clean air, education, employment,
businesses? safety.
• “Wants add to the quality of life.”
– Things that add comfort and pleasure to your life are wants.
– A small apartment meets the need for shelter, but many
“To satisfy needs and wants” people want a large house.

“Needs and wants are unlimited. That’s why businesses are

established to satisfy and match people needs and wants.”

iAcademy iAcademy

5
 03/05/2014

iAcademy iAcademy
People satisfy their needs and wants by
purchasing and consuming goods and services.

• Goods are things that you can see and touch.

– Goods are tangible/have physical characteristics.
What do businesses need to
– Cars, bags, clothes, etc. produce goods and services?
• Services are activities that are consumed at the same
time they are produced.
– Services are intangible/have no physical characteristics.
– Banking services, taxi services, cleaning services, etc.
“Economic Resources”
“Businesses supply goods and services that satisfy consumer’s
needs and wants.”

iAcademy iAcademy

iAcademy iAcademy

Economic Resources Factors of production

• Natural resources
• Economic resources are the means through which – Raw material supplied by nature.
goods and services are produced.
– Oil, mineral, timber, air, water, lake, ocean, nutrients needed
• Economic resources are called factors of productions. to grow crops, animal, fishes, etc.
• Economic resources are limited. • Human resources
• Three kinds of economic resources – The people who produce goods and services.
– Natural resources – Farmers, factory workers, managers, salespersons, etc.
– Human resources • Capital resources
– Capital resources – The products and money used in the production of goods and
services.
– Buildings, equipment, supplies, money to run the businesses,
etc.
iAcademy iAcademy

6
 03/05/2014

iAcademy iAcademy

Factors of production An Introduction to business & Economic

environment
• Play video
– How Frito-Lay makes potato chips • Satisfying needs and wants
• Economic choices
What are the economic resources used in • Economic system
Frito-Lay potato chips production? • Demand and supply

iAcademy iAcademy

iAcademy iAcademy

The basic economic problem Economic choices and Trade-off

Individuals and • Scarcity forces people to make economic choices.
businesses have The economic
unlimited needs and Scarcity resources are limited – E.g. you have $60 to spend over the weekend. If you spend
wants. money to buy a new pair of shoes, you will not have enough
money to spend on pizza and movie with your friends.

Not having enough

resources to satisfy • Due to limited resources, you can only choose one
every need/want
Basic Economic alternative and when you give up something to have
Problems
E.g. People with
another thing, you are making a trade-off.
limited incomes have – According to earlier example, you are making trade-off
to carefully choose the
best way to spend
between buying a new pair of shoes and having pizza and
Force people to their money to meet movie with your friends.
make economic their needs/wants.
choices
iAcademy iAcademy

7
 03/05/2014

iAcademy iAcademy

Opportunity cost Opportunity cost

• One of the effective ways to help make economic • Play video

choices is to consider an opportunity cost. – The Definition and an Example of Opportunity Cost

• Opportunity cost is the value of next-best alternative

that you did not choose.
What is the opportunity cost of enrolling in
– From the earlier example. the opportunity cost of having pizza this university?
and movie with friends is not getting a new pair of shoes.

• In decision making, the benefit you get from your

choice should be greater than the benefit from the
next-best choice.
iAcademy iAcademy

iAcademy iAcademy

An Introduction to business & Economic Types of economic system

environment
• Economic system is the nation’s plan to identify three
• Satisfying needs and wants economic questions:
– What to produce?
• Economic choices
– How to produce?
• Economic system
– What needs and wants to satisfy?
• Demand and supply
• The types of system is based on how much government
is involved in the marketplace.
– Command economy
– Market economy
– Mixed economy

iAcademy iAcademy

8
 03/05/2014

iAcademy iAcademy

Command economy Market economy

• The resource are owned and controlled by the • The resource are owned and controlled by the people of the
government. country.
• Individuals through buying and selling of goods and services in
the market place decide
• Government officials decide – What and how goods are produced
– What and how goods are produced – How they will be distributed and shared
– How they will be distributed and shared – How much of resources will be used to produce goods for consumers.
– How much of resources will be used to produce goods and • Market place is anywhere that goods and services exchange
services for consumers. hands including supermarket, the internet, a business office or
flea market.
• Consumers and businesses make decisions based on their own
• Personal economic freedom is limited in a command self-interest.
economy.
iAcademy iAcademy

iAcademy iAcademy

Mixed economy An Introduction to business & Economic

environment
• A mixed economy combines elements of the command
and market economies. • Satisfying needs and wants
– While the past half-century has seen a shift away from
command economies and toward market economies, various
• Economic choices
degrees of government involvement in the marketplace exist. • Economic system
• Demand and supply
• Most nations of the world can be classified as mixed
economies.
– E.g. China which was a strict command economy now has
moving toward market economy as China plays a major role
of global producers.

iAcademy iAcademy

9
 03/05/2014

iAcademy iAcademy

Consumers set demand Demand curve

• When consumers make decisions about what they will purchase, • A demand curve is a graphical or mathematical diagram that shows the
they determine the demand for goods and services. relationship between the price and quantity of a product that consumers are
willing to buy.
• Demand is the quantity of a good or service that consumers are
willing and able to buy. Price ($)
Demand Curve From the graph, at the price of $400,
400 the product will have a quantity
• The higher the price of a good, the less people will demand that demanded at 10 units with following
350
good. 300 equation.
250
200
P = 500 – 10Q
150
100
50 The demand curve is downward.
Quantity
0 hence, the higher the price of a good,
10 20 30 40
Price ($) 400 300 200 100 the less people will demand that
Quantity 10 20 30 40 good.
demanded

iAcademy iAcademy

iAcademy iAcademy

Producers establish supply Supply curve

• Understanding demand tells a business what type and quantity • A supply curve is a graphical or mathematical diagram that shows the
of products to supply. relationship between the price and quantity of a product that producers are
willing to sell.
• Supply refers to the quantity of a good or service that businesses
are willing and able to provide. Price ($) Supply Curve From the graph, at the price of $100,
400 the product will have a quantity
• The higher the price, the higher the quantity supplied. Producers 350 supplied at 10 units with following
supply more at a higher price because selling a higher quantity at 300 equation.
250
a higher price increases revenue.
200
150 P = 10Q
100
50
Quantity
0 Supply curve is upward. Hence, The
10 20 30 40
higher the price of a good, the more
Price ($) 100 200 300 400
producer will supply that good.
Quantity 10 20 30 40
supplied

iAcademy iAcademy

10
 03/05/2014

iAcademy iAcademy

Determining market price Determining market price

Price ($)
Supply
• The market price is the point where supply and demand are 400
Market
equal. 300 price

• At the given price, suppliers are selling all the goods that they 200

have produced and consumers are getting all the goods that they 100 Demand
are demanding. 0 Quantity
10 20 30 40
Price ($)
400 Supply From the graph,
Market • the demand curve equation is P = 500 - 10Q
300 price
• the supply curve equation is P = 10Q
200 Optimum quantity for the economy is where demand equals supply, hence
Pd = Ps; 500 – 10Q = 10Q then Q = 25
100 Demand
Q = 25; Pd = 500 – 10(25) = 250
0 Quantity Q = 25; Ps = 10(25) = 250
10 20 30 40
At the market price of $250, quantity demanded and supplied will be matched at 25 units
iAcademy iAcademy

iAcademy iAcademy

Demand and Supply Demand and Supply

• Play video What do think what would happen to the demand of a product if
– Supply and Demand (clip) following situations occur?
• Increase in consumer income
• Decrease in price of a competitor’s product
• Decrease in population size

Summary
• The lower the price of a product, the lower the supply and the What do think what would happen to the price of a product if
higher the demand following situations occur?
• Consumers want to buy as cheaply as they can while producers • If demand increases and supply remains unchanged
want to sell at the price as highly as possible to cover the costs • If demand decreases and supply remains unchanged
• If demand remains unchanged and supply increases
and make a profit. • If demand remains unchanged and supply decreases

iAcademy iAcademy

11
 03/05/2014

iAcademy iAcademy

Any Questions? Summary: Week 1 Lecture

• Businesses established to satisfy needs and wants.
• Businesses need economic factors to produce goods
and services
– Natural, human and capital resources.
• Because of scarcity, consumers need to make
economic choices (trade-offs)
– Opportunity cost needs to be consider when making choices.
• Three types of economic system
– Command, market and mixed economies
• Market price is set where the demand and supply are
equal.
iAcademy iAcademy

iAcademy iAcademy

What to Expect: Week 1 Tutorial

• Students will tackle case studies that illustrate
and discuss the concepts taught during the
lecture.

iAcademy iAcademy

12