Chapter 1: Introduction to business

Focus on:
- What is an organization?
Social arrangement for controlled performance of collecting goal, boundary separating it
fr environment
Ex: ownership, control, activity, size, legal status, source finance
Profit-oriented: business
input (material, labour, finance) (secondary) (-> cost) -> (revenue fr GS ->) output of
goods/service -> profit -> maximise profit/dividend/wealth (primary) -> owner
non-profit organizations: structure and run like business
revenue (tax) -> input (-> cost) (secondary) -> minimise cost of primary goal -> output ->
provision of GS (primary) -> public beneficiaries (charity, trade union, gov agency,
hospital, school) -> revenue(taxation)
- What is a business?
Aim to make profit for owner, maximise wealth, regard as entity separate fr its owner
- Stakeholders in the business?
Who has stake in organization, have an intersest to protect in respect of waht org does
and how perform
Primary stakeholder: shareholder, secondary stakeholders?
- Objectives of businesses?
Primary object: maximise profit (create value by make the cost of input<output), increase
shareholder wealth (acceptable level of risk)
Secondary: support primary (market position, product developement, technology,
employee and management)
Mission: how it satisfies various stakeholder
Elements: purpose: why exist and for whose, strategy: operational logic, what do we do
and how do we do, policy and standard: what actually do, value: core principle
Vision: the future state, determine what mission should be
Goals: desired end result
Non operational aim: qualitative goal
Operational object: quantitative, should be SMART: specific, measurable, achievable,
relevant, time bound
Plan : achieve operation object
Standard: desire level of performance: physical, cost, quality
Câu hỏi ví dụ:
1.1. Which of the following characteristics do all organizations have in common?
Pursuing controlled performance and social arrangement.
Pursuing individual goals.
Pursuing revenue.
Pursuing complete integration with the environment.
1.2. Alpha company states in its annual report that it sees itself as becoming the
ASEAN market leader for synthetic tents by 2030. This statement is the company’s:
Plan.
Vision.
Standard.
Responsibility.
1.3. For a business, which of the following would be classified as secondary
objectives?
The business’s market share target for next year.
The business’s mission statement.
The business’s financial objective of wealth maximization.
The business’s stock price increasing.
1.4. An entity ensures it can meet the needs of the present without compromising the
ability of future generations to meet their own needs. Which of the following most
accurately describes the way the entity is behaving?
Responsibly.
Ethically.
Sustainably.
Morally.
1.6. Which of the following company’s stakeholder group is putting the company
under pressure to improve its return on investment?
Shareholders.
Customers.
Suppliers.
Employees.
1.9. Maximizing the wealth of its shareholders is the stated goal of Averna company.
The company’s objectives have been expressed as a hierarchy of primary and
secondary objectives. Identify which of the following is most likely to be Averna’s
primary business objective.
To increase the annual profit after tax by 145% in the next 15 years.
To introduce an average of two new products each year for the next 5 years.
To double the share price within the next 7 years.
To become the market leader in four market segments within the next 10 years.
1.10. Which of the following is the primary stakeholder of a company?
Shareholder.
Customer.
Supplier.
Government.
1.11 The public sector is normally concerned with:
Making profit from the sale of goods.
Maximizing owner’s wealth.
The provision of basic government services.
Raising funds by subscriptions from members to provide common services.
1.12. Which of the following is a not-for-profit organization?
A bar club.
A hotel.
A souvenir shop.
Charities.
1.18. Letting people specialize in what they do best and pool their expertise refer to
which of the organization’s advantages?
Time saving.
Knowledge sharing.
Expertise pooling.
Synergy effect.
1.20. SMART in characteristics of operational objectives of a business means:
Special, Measurable, Achievable, Realistic and Time-bound.
Specific, Measurable, Achievable, Relevant and Time-bound.
Special, Managerial, Assessable, Realistic and Time-bound.
Specific, Measurable, Assessable, Relevant and Time-bound.
1.33. ABC is a charity providing youth services in large cities. The chief executive is
involved in preparing a document outlining the services provided by the charity.
She wants to stress that it always seeks to operate at maximum efficiency. In
stressing this aspect of the charity’s operations, the chief executive is highlighting
the charity’s:
Vision.
Mission.
Plan.
Secondary objective.
1.34. The directors of NBC company have made strategic decisions in the past to
enhance their own prestige rather than the wealth of the company’s shareholders.
However, at the recent Annual General Meeting, the shareholders expressed
satisfaction at the company’s recent profit record. It would appear that the
directors are involved in:
Constraining the business.
Revenue maximization.
Satisficing.
Profit maximization.