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1.1 Introduction to Business

Management
Notes
1.1.1 Roles of business, functions and sectors
The role of businesses in combining human, physical and financial resources
to create goods and services— Purpose of a business?
Decision-making organisation that uses and combines resources to create goods
and services that people/society needs/wants

1. Most business aim to gain profit through the business

2. Some aim to achieve social objectives e.g vinnies, salvation army

Businesses produce:
Consumer goods and consumer services— standard services

Goods: items that are tangible (can be touched)

Services: knowledge, expertise or experience etc that are intangible (can't be
touched)
Capital goods: goods that are used by industry to aid the production of other goods
e.g laptops, manufacturing machines, commercial vehicles

Production process (value adding process)

imputs→ production process (transformation process)→ outputs

e.g metals+labour+capital etc→ manufacture→ water bottle

e.g professors→lecture students → university degree

Entrepreneurship: takes the risks of purchasing land, workers, materials etc to

produce a product and gain profit. Entrepreneurship is an essential imput in any

1.1 Introduction to Business Management 1

 production process

4 main functions of a business:

HR (Human Resources):

Recruiting, training, maintaining (pay) and separating

Employee velationships

Ensures you have the right people for the job who are productive (ability to
gain profits) and enjoys the job

Marketing:

Researching and developing products and products

Priced, distributed and promoted appropriatly

Finance and accounts:

Control the flow of finance throughout the business

Analyse accounts

Essential for other functions of a business to work properly

Provides limitations (budgets)

Sets goals for the business as a whole

Operations:

Production process

Ensures that resources are available and adequate fro production

Enough to achieve high quality and efficiency

Primary, Secondary, Tertiary and Quaternary Sectors

Goods

Primary: Raw materials acquired through extraction, mining, farming,

fishing, hunting etc

Secondary: Processed goods acquired through manufacturing

Services

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 Tertiary: Every other type of service e.g financial, healthcare, education,
transport, security etc

Quaternary: Knowledge-related services e.g IT, media, web-based

services

Vertical Intergrations: when a business buys in to other businesses of other

sectors e.g an airline company (tertiary) purchasing a plane manufacturer (primary)

Horizontal Intergrations: when a business acquires or merges with another

business of the same field/activity e.g two airlines merging

Possible motivations include: attempting to form an empire in the field to

increase competitiveness, or saving another company that is reaching
bankruptcy

Chain of Production

steps through the different sectors from primary to tertiary

industrialisation is the process of shifting business from promary production to

manufacturing to tertiary and quandnary

Why do more economically developed countries have more tetriary and quandnary
sectors?

Higher income countries leads to more demand on leisure, customer service, quality
of services, support services

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