INTERNATIONAL TRAINING COLLEGE - LINGUA

Towards Educational Excellence

NCHE Reg. No: R0014
NQA Accreditation No: 000095

DEPARTMENT OF BUSINESS AND MANAGEMENT

INTRODUCTION TO BUSINESS MANAGEMENT

 Defining business management
It is the act of organizing human and other resources to
accomplish the desired goals and objectives of a business.
Business management comprises organizing, planning,
leading, staffing or controlling and directing a business
effort for the purpose of accomplishing the entity's listed
goals
 The role of business in society
 To achieve the interests of shareholders
 To invest in their employees
 To protect the environment
 To deal fairly and ethically with their suppliers
 To address issues of poverty, hunger, lack in education and
health issues in areas around their offices and factories
 Economic systems
 An economic system is a means by which societies or
governments organize and distribute available
resources in a country.
 Economic systems regulate factors of production,
including capital, labor, physical resources, and
entrepreneurs.
 Types of Economic Systems
 Economic systems can be categorized into four
main types:
 traditional economies
 command economies
 market economies
 mixed economies,.
 Traditional economic system
 The traditional economic system relies on the leadership of a
Chief
 It follows certain established traditional ways of production.
 It relies a lot on people, and there is very little division of labor or
specialization
 It is very basic and the oldest of the four types.
 Some parts of Namibia still function with a traditional economic
system in rural settings.
 Command economic system
 The government controls everything in the economy
 Also known as a planned system
 It is common in communist societies like China and North
Korea.
 Market economic system
 It is based on the concept of free markets.
 There is very little government interference.
 Regulation comes from the people and the relationship
between supply and demand.
 Examples are America and Sweden
 Mixed system
 Mixed systems combine the characteristics of the market and
command economic systems.
 Almost all countries including Namibia follow a mixed system.
 Most industries are private, while the rest, comprised
primarily of public services, are under the control of the
government.
 E.g. Namwater; Namwater and Central Hospitals
 The classification of businesses

 We will look at three main types of businesses:

 Sole Proprietorships
 Partnerships
 Limited Liability Companies
 Sole Proprietorship
 A sole proprietorship is owned by one individual only.
 It is the most simple of the types of businesses to start and
operate but
 it also offers the least amount of protection for the owner.
 sole proprietorships do not create a separate legal identity
for the business.
 The owner is fully responsible for all liabilities or debts of the
business
 E.g. Ndapuka bus services, Lingua College, Kapana vendors
 Partnership
 A partnership is a business owned by two or more people,
known as partners.
 Owners are liable for the liabilities of the firm.
 Compared to sole traders, partnerships offer more flexibility
but are also exposed to more risk
 The partners can share ideas
 E.g Medical practitioners; legal practitioners.
 Limited Liability Company (LLC)

 It is a separate legal entity created by shareholders

 They benefit from limited liability status.
 In LLCs, the company exists as its own legal entity.
 This protects the owners of the LLCs from being
personally liable for the operations and debts of the
business. E.g. Namdeb; FNB; Roswing Mine
 Entrepreneurship
 An entrepreneur is someone who does a
specific project or business activity.
Characteristics or traits that distinguish
entrepreneurs
 Passion
 Entrepreneurs are not in it for the money.
 While that may be an added bonus, the true benefit is doing
what they love.
 Building a business takes a lot of time and effort.
 It means putting in longer hours and doing extra work.
 If you don’t love what you do, you're not going to want to do
what it takes to achieve success.
 Steve Jobs , founder of Apple once Said, 'People With Passion
Can Change The World’
 E.g. Ms. Mettler of Lingua College; F. Indongo; S.Ndapuka etc.
 Motivation
 Entrepreneurs are dedicated to their work.
 They do not rely on a manager or colleague to push them
towards their goals.
 Their drive comes from within and allows them to motivate
others in turn.
 In his book, “Leaders Eat Last: Simon Sinek writes, “If your
actions inspire others to dream more, learn more, do more and
become more, you are a leader.”
 Optimism
 When you’re just starting out, it can seem like getting your
business off the ground will never happen.
 But entrepreneurs don’t think like that.
 They are optimistic about the future and are always looking
ahead with rose tinted spectacles.
 Jonathan Swift wrote, “Vision is the art of seeing things that
are invisible to others.”
 Creativity
 Entrepreneurs don’t think the same way as everyone else
does.
 They see the world differently and think outside the box.
 Businesses are built on big ideas, and those big ideas need to
come from a place of creativity, from a way of thinking that
differs from everyone else’s thinking.
 Maya Angelou once said, “You can’t use up creativity. The
more you use it, the more you have of it.”
 Risk-Takers
 Successful entrepreneurs understand that taking risks should not
scare them.
 It is necessary to achieve your goals.
 Entrepreneurs don’t let uncertainty and potential failure stop
them from doing what needs to be done.
 They look at problems as challenges and risks as opportunities
that push them forward
 Tim Ferriss writes, “What we fear doing most is usually what we
must do.”
The role of entrepreneurs in society
 Entrepreneurs Are Innovators
 Entrepreneurs come up with new products and services that
advances in technology have made possible. Technology is
rapidly changing things.
 Old, blue-collar manufacturing jobs are declining, and other
occupations simply don't exist anymore.
 Remember telephone switchboard operators, movie film
projectionists or elevator attendants?
 Entrepreneurs Create Jobs
 As entrepreneurs start new businesses, they need to hire
employees.
 These new companies become engines of job creation.
 Entrepreneurs create entirely new industries and
opportunities for employment
 Consider the development of the internet
 Entrepreneurs Raise Standards of
Living
 Entrepreneurs see a need in the marketplace and use their
innovative talents to find a solution.
 They start a new business and hire employees.
 The workers earn an income, which they spend in the local
economy.
 All of this creates wealth for the population and raises the
standard of living for everyone involved
 Entrepreneurship promotes Economic Growth
 It starts with new businesses generating wealth for the
population.
 New markets add wealth to the economy when entrepreneurs
invest their own money to develop innovative products and
services.
 Lenders and other investors contribute more capital to the new
ventures to put more funds at work.
 Businesses pay taxes on their profit, and employees pay taxes on
their income.
 The government takes this added income and spends it to
improve the economy.
Skills required for entrepreneurship
 Curiosity

 Great entrepreneurs discover new problems, bring out

potential opportunities and new products.
 This comes from being passionate about different fields of
study and business ideas outside of one’s comfort zone.
 Time management
 Time management is needed for priority planning
defining milestones and execution.
 The right project management and time allocation
method are needed to get the work done.
 Strategic thinking

 An entrepreneur should be able to to break down a

problem to its core and show opportunities for
growth.
 An entrepreneur should figure out creative
solutions.
 Efficiency
 You need high performance when it comes to solving a
problem.
 Applying the 80/20 rule and other techniques for yielding
higher results in less time.
 Switching between different activities and progressing
effectively day-to-day
 Resilience
 Handling rejections, stress, burnouts, lack of focus, slow
progress.
 Determination and eagerness to fight the same dragon
every morning are instrumental when it comes to
building a business from scratch.
 Communication

 Clear communication is important for each

and every interaction with clients, partners,
peers, clients, prospects
 Networking
 Growing a network facilitates business
opportunities, partnership deals, finding
subcontractors or future employees.
 It expands the horizons of Public Relations and
sending the right message to all people.
 Finance
 Finance management will make or break a business.
 Handling resources properly and carefully assessing
investments compared is an important requirement
for entrepreneurs.
 Branding

 Building a consistent personal and business brand

tailored to the right audience.
 Igniting brand awareness in new verticals.
 Sales
 Being comfortable doing outreach and creating new
business opportunities.
 Finding the right sales channels that convert better
and investing heavily in developing them.
 Building sales funnels and predictable revenue
opportunities for growth.
The resources needed to start a business
 There are five resources you need upfront to start a
business that has staying power.
 Full Commitment
 Successful entrepreneurs are fully committed to their
business ventures.
 You have to put your heart and soul into what you’re doing
 Truly believe in your product or service
 Be prepared to work long hours to get all the tasks done
that are required to grow and sustain a business.
 Be a "Type D”
 To create a profitable business that endures, you also have
to be a "Type D” person
 This means someone who has a desire for success coupled
with drive, discipline, and determination
 Get the Business Knowledge You Need
 Business knowledge before you start a business is very
important.
 All the drive and determination in the world isn’t going to
help you if you don’t have the knowledge to run a business
and don’t research and plan for your success appropriately.
Four ways to identify more business
opportunities.
 Listen to your potential clients and
past leads
 When you’re targeting potential customers listen to their needs,
wants, challenges and frustrations within your industry.
 Check if they have used similar products and services before.
 What did they like and dislike?
 Why did they come to you?
 What are their complains about your products or services?
 This will help you to find opportunities to develop more tailored
products and services
 Listen to your customers
 When you are talking to your customers, listen to what they
saying about your industry, products and services.
 What are their frequently asked questions? Experiences?
Frustrations? Feedback and complaints?
 This valuable customer information will help you identify key
business opportunities to expand and develop your current
products and services.
 Look at your competitors
 Do a little competitive analysis (don’t let it lead to competitive
paralysis though) to see what other startups are doing, and
more importantly, not doing?
 Where are they falling down?
 What are they doing right?
 What makes customers go to them over you?
 Analysing your competitors will help you identify key business
opportunities to expand your market reach and develop your
products and services.
 Look at industry trends and insights
 Subscribe to industry publications
 join relevant associations
 set Google alerts for key industry terms and news
 follow other industry experts on social media.
 Absorb yourself in your industry and continually educate
yourself on the latest techniques and trends.
 The establishment of a business

 One of the first decisions that you will have to make as a

business owner is how the company should be structured.
The legal forms of ownership of business
Sole Proprietorships/One man Business
 Advantages of a Sole Proprietorship
 Easiest and least expensive form of ownership to organize.
 Sole proprietors are in complete control, and may make
decisions as they see fit.
 Sole proprietors receive all income generated by the
business to keep or reinvest.
 The business is easy to dissolve, if desired.
Disadvantages of a Sole Proprietorship
 Sole proprietors have unlimited liability and are legally
responsible for all debts against the business.
 Their business and personal assets are at risk.
 May be at a disadvantage in raising funds and are often
limited to using funds from personal savings or consumer
loans.
 May have a hard time attracting high-caliber employees, or
those that are motivated by the opportunity to own a part
of the business.
 Partnerships
 In a Partnership, two or more people share ownership of a
single business.
 Like proprietorships, the law does not distinguish between
the business and its owners.
 Advantages of a Partnership
 Partnerships are relatively easy to establish; however, time
should be invested in developing the partnership agreement.
 With more than one owner, the ability to raise funds may be
increased.
 The profits from the business flow directly through to the
partners’ personal tax returns.
 Prospective employees may be attracted to the business if given
the incentive to become a partner.
 The business usually will benefit from partners who have
complementary skills.
 Disadvantages of a Partnership
 Partners are jointly and individually liable for the actions of the
other partners.
 Profits must be shared with others.
 Since decisions are shared, disagreements can occur.
 Some employee benefits are not deductible from business
income on tax returns.
 The partnership may have a limited life; it may end upon the
withdrawal or death of a partner
 Location of the business
 Positioning has always been an important element of setting
up a business.
 Your success as a business depends on how well you are
positioned to be found.
 Positioning includes various factors, from location to the price
of your product or service to the message you use to promote
the business, online and offline.
 Business and stakeholders

 An organization's stakeholders are the individuals or

groups that influence or have an interest in the firm’s
actions and decisions.
 Shareholders

 Shareholders have a stake in the firm through their share

ownership.
 Their objectives include but are not limited to share price
growth
 growth in dividends and growth in the value of the shares.
 Employees
 Employees are the workers employed by the firm.
 Employees include both management and subordinate staff.
 They directly influence the profits of the firm since they are
involved in the day-to-day operations.
 Among their top priorities in return for their services include job
satisfaction, remuneration, job security, motivation and self-
actualization.
 They are also interested in the company’s survival and growth as
their jobs depend on it
 Government
 The government is a major player in any business environment as
it plays a regulatory and supervisory role.
 The government aims to ensure that all companies abide by the
existing legal provisions.
 Matters such as tax payment, licensing, standardization and
protection of consumer welfare form part of the objectives of the
government with regards to companies.
 Customers
 Customers keep companies in business by purchasing their
products and subscribing to their services.
 They are important players, thus every business should ensure
that it does not compromise their needs.
 Customers want to achieve value for their money through quality
products, reliable services, good customer care and fair prices,
among other factors.
 Creditors
 Creditors provide financing to the company by issuing loans and
buying corporate bonds.
 They are important as they help to meet the firm’s capital
budgeting needs.
 Their objectives include receiving repayment on loan amounts
and interests earned.
 The firm’s credit rating is also of their primary concern, as they
need a guarantee that their money is secure.
The composition of the business
environment
 The Micro Environment
 Microenvironment refers to the environment which is in direct
contact with the business organization and can affect the routine
activities of business straight away.
 It is associated with a small area in which the firm functions.
 The microenvironment is a collection of all the forces that are close
to the firm.
 They can influence the performance and day to day operations of
the company, but for the short term only.
 Its elements include suppliers, competitors, marketing
intermediaries, customers and the firm itself
 The Macro Environment
 The general environment within the economy that influences the
working, performance, decision making and strategy of all business
groups at the same time is known as Macro Environment.
 It is dynamic in nature.
 Therefore, it keeps on changing.
 It constitutes those outside forces that are not under the control of
the firm but have a powerful impact on the firm’s functioning.
 It consists of individuals, groups, organizations, agencies and others
with which the firm deals during the course of its business.
 Differences between micro and macro environment
 The microenvironment is the environment which is in immediate contact
with the firm.
 The environment which is not specific to a particular firm but can influence
the working of all the business groups is known as the macro Environment.
 The factors of the microenvironment affect the particular business only, but
the macro-environmental factors affect all the business entities.
 The microenvironmental factors are controllable by the business but to some
extent only.
 The macroeconomic variables are uncontrollable.
 The elements of the microenvironment affect directly and regularly to the
firm which is just opposite in the case of the macro environment.
 SWOT analysis
 SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
 Strengths and weaknesses are internal to your company—things that you
have some control over and can change.
 Examples include who is on your team, your patents and intellectual
property, and your location.
 Opportunities and threats are external—things that are going on outside
your company, in the larger market.
 You can take advantage of opportunities and protect against threats, but
you can’t change them.
 Examples include competitors, prices of raw materials, and customer
shopping trends.
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