BUSINESS

ORGANIZATION AND 1.1

ENVIRONMENT
BY THE - identify the role(s) of business
in a society
END OF
THIS
- give examples of businesses
SESSION, that have 1 or multiple activities
YOU WILL
BE ABLE - explain the role of business in
combining 4 resources to create
TO: goods and services
WHAT IS A BUSINESS?
Organization that uses resources to meet the needs of consumers by providing a
service or product.
 THE ROLE OF A BUSINESS
A business tries to meet the needs of people or companies in the following ways:
- producing something from the earth (crops, raw material extraction)
- creating a product
- providing a service
Some businesses focus on 1 activity, and others focus on multiple activities.
Examples?
Almarai Tilda Rice
Pepsi Lipton Tea

Added Value:
Difference between the selling price and the cost of inputs
involved in making it.

(increase in value that a business creates through a production

WHICH OF THE FOLLOWING
ARE BUSINESSES?
UN (UNITED NATIONS) AMERICAN RED CROSS
APPLE RED CRESCENT
BLUE MOSQUE IN ISTANBUL RIYADH ZOO
FAIRMONT HOTEL VISION 2030

Work in pairs: Find 2 examples of

businesses AND 2 examples of Non-
businesses.
BUSINESS ACTIVITY FLOW
CHART
HUMAN

GOODS
PHYSICAL

PRODUCTION
FINANCIAL
SERVICES

ENTERPRISE

PROCESSES TO ADD PRODUCT

RESOURCE INPUTS VALUE OUTPUTS
 WHAT ARE THE DIFFERENT
RESOURCE INPUTS/ PROCESSES
AND OUTPUTS?PROCESSES
INPUTS OUTPUTS
Human: right number and quality Capital Intensive: using lots of Goods: tangible products that
of people required to make the land/machinery, or very expensive you can take home
product/service land/machinery, less labor.

Physical: the right quality and Labor Intensive: using a lot of Services: intangible, cannot
quantity of material, machinery and labour, less land/machinery be taken home
land to make the product/service.

Financial: the quantity of

cash/money to make the
product/service HUMAN
GOODS
PHYSICAL
Enterprise: the business idea itself, PROCESSES
FINANCIAL
and how determined a person is for
success SERVICES
ENTERPRISE
 ACTIVITY 1.1
Match the terms with their definitions:
1) CAPITAL INTENSIVE a) tangible products that you can take home
2) SERVICES b) the business idea itself
3) HUMAN c) using a lot of labour, less land/machinery
4) ENTERPRISE d) intangible, cannot be taken home
5) LABOR INTENSIVE e) the right quality and quantity of cash to make the product/service
6) GOODS f) right number of people required to make the product/service
7) FINANCIAL g) using lots of land/machinery, less labor.
8) PHYSICAL h) the right quantity of material, machinery and land to make the
product/service.
BASELINE TEST- KODAK
1. Describe the role of a business in
a society. What do you think was
the role of Kodak when it was first
founded in the late 1800’s?

2. Explain why Kodak started to

struggle financially in the late
1990s.

3. Describe how Kodak should have

used 2 or more business functions
to revitalize its business.

4. Use your phone to research how

Kodak turned its business around
to generate revenue. (Google
“transformed kodak bbc”, do not
copy word by word, use your own
words)
BUSINESS FUNCTIONS 1.1 PAGE 3
 BUSINESS FUNCTIONS
All businesses (both small and large) are organized by function (what is to be done):

1. Human resources
2. Marketing
3. Finance and accounts
4. Operations management or production
- In small businesses the owners do these functions themselves
- In large businesses, they hire specialized managers (separate departments)
 FUNCTIONS AND ROLES
MATCH THE FUNCTIONS WITH THEIR ROLES:
FUNCTION ROLE

HR Find appropriate funds to make the product/service

FINANCE AND ACCOUNTS Hiring, firing, Training of employees.

Enforcement of workplace rules & regulations

MARKETING Ensure that appropriate processes are used in order to

make the product/service, and it is of high quality

OPERATIONS Educate customer,

MANAGEMENT/PRODUCTION Develop products/markets to make profit
 FUNCTIONS AND ROLES
Are the 4 functions independent or interdependent?

Example: if the marketing department decides that a product needs to be

changed based on consumer demand, the production department must change
the process of making the product based on the demand of consumers.
SECTORS OF BUSINESS Page 6
ACTIVITY
SECTORS OF BUSINESS
ACTIVITY
Goods Services
Primary Tertiary

Secondary Quaternary
 Goods Services

Primary Tertiary

PRIMARY SECTOR
Secondary Quaternary
 PRIMARY
SECTOR
•Involves the harvesting of naturally
available resources
•Regulated and protected by the
government
•Fuels (produces inputs for) the other
economic sectors
•Example countries: Vietnam, Philippines,
Canada,(more in developing countries)
•
 Goods Services

Primary Tertiary
SECONDARY SECTOR
Secondary Quaternary
 SECONDARY
SECTOR
•Involves manufacturing of raw products to
finished or component goods
•Finished goods – exported or sold to consumers
•Component goods – sold to companies in the
tertiary sector
•Example countries: China, Scotland, Japan, Italy,
USA (more in developing countries)
 TERTIARY
SECTOR
Goods Services

Primary Tertiary

Secondary Quaternary
 TERTIARY
SECTOR
• involved with service (not goods) and retail

• Relies on the primary and secondary sector for

inputs
• Example countries: USA, UK, Singapore, Hong
Kong (developed)

• (telecom, finance, media,

• Entertainment, health etc.)
QUATERNA
RY SECTOR
Goods Services

Primary Tertiary

Secondary Quaternary
 QUATERNAR
Y SECTOR
•Subgroup of tertiary. Knowledge based
services
•Includes government, education,
libraries, scientific research,
information technology, etc.
Led by developed countries and big companies
Research and capital intensive
Works with other sectors of the economy
Disrupts many labor markets
 So what’s the difference?

TERTIARY VS
QUATERNARY
Tertiary services: more repetitive. Quaternary services: more intell
 DECIDE IF IT’S “P”, “S”, “T”,“Q” OR
A COMBINATION
___1. designing robots ____ 5. IT developer

___ 2. teacher ____ 6. fishing

___ 3. diamond mining ____ 7. Bakery

___ 4. financial planner ____ 8. handmade pottery

 So how do the 4 sectors work together?
EXAMPLE: PRODUCTION
CHAIN FOR CARS
Raw material is Processed and Cars shipped to Car magazines generate
extracted: rubber, made into dealerships reviews on car features
metal, glass automobile parts, worldwide and and performance
then made into sold
cars

PRIMARY GOODS SECONDARY TERTIARY

SERVICES QUATERNARY
GOODS
SERVICES
 TASK 1.1A: CREATE YOUR
OWN PRODUCTION CHAIN

Think of some everyday products

that you use and describe their
production chain:
Examples:
A. Your cellphone
B. A burger you purchase
C. A football
Or any other product…
PLEASE SUBMIT ON GOOGLE CLASSROOM!
SECTORAL CHANGE PAGE 8
SECTORAL CHANGE
Economies are divided into: SECTORS.

PRIMARY SECONDARY TERTIARY

How can you measure the size of each of sector? QUATERNARY

by the number of people employed in them.

How advanced do each of sectors need to be?
Primary – not very (low-skilled workers used for extraction of raw material)
Secondary – slightly more skilled (processing material to produce final product)
Tertiary – moderately skilled (shipping and selling final product)
Quaternary – highly skilled (producers and managers of information about product)
Employment data 2013 – as percentage of total employment

Country Primary Sector Secondary Sector Tertiary/Quaternar

y Sector

UK 2% 17% 81%

China 42% 26% 32%

Ghana 54% 20% 26%

SECTORAL CHANGE

More
jobs
in…..

And so on….
 SECTORAL
CHANGE
Why do these sectors change in size?
Industrialization and economic development.

How do sector sizes change with technological advancement?

secondary, tertiary, and quaternary size ________ because more highly
skilled people available in workforce.
Primary sector size ____________ because other sectors are doing well.
 EXAMPLES OF
SECTOR SIZES IN
DIFFERENT
ECONOMIES
Activity:
Describe how the pie charts on the
right, change as an economy grows
from a low income one, to a high
income one.
Include the changes to each sector,
along with a reason for each change.
 EVALUATING SECTORAL
CHANGE
- Total national output (GDP) ↑
- average living standard ↑
- huge movement of population from
- more production of goods can decrease countryside to towns/cities  housing & social
imports issues
- more jobs available
- Government can collect more tax - expansion of manufacturing industries may
make it difficult for companies to recruit staff
- value added to country’s raw material for
export
- May require importing of raw material (cost)

- Pollution ↑
 DEINDUSTRIALIZATION
-secondary sector size decreases but tertiary increases (more developed
economies)
-Examples:
- UK in 25 years, secondary sector decreased 13%
-Possible reasons:
-Rising income (higher living standards) causes people to spend more on
services (restaurants, hotels, tourism, financial services)
- As other developing countries develop, the developed countries use cheap
labor from the developing countries.
Research ONE business operating in Saudi Arabia.
(you can work by yourself or in pairs only)
Present your info to the class.

A. Identify which sector or sectors of the

economy it operates in.

B. What are its main business activity/activities.

CLASS TASK 1.1 B

 ENTREPRENEURSHIP
AND
INTRAPRENEURSHIP
Who is an entrepreneur?
a person who plans, organizes, and manages a
business, taking risks, rewarded with profit.

Who is an intrapreneur?
a person who works in a company and
demonstrates entrepreneurial thinking, to
develop new products/services to benefit
his/her employer, rewarded with pay.
 ENTREPRENEUR AND
INTRAPRENEUR
SIMILARITIES & DIFFERENCES (E, I,
OR B FOR BOTH)
- choose a management team - Compete for resources

- influence others - form and lead teams

- budget for projects - set expectations

- find money - lead without power

- Coordinate across business units - generate ideas

- influence others - take risks

COMMON CHARACTERISTICS
(ENTREPRENEURS AND
INTRAPRENEURS)
Innovative

Commitment and self motivation

Did yo
u kno w
Multi skilled ?
80 % o
entrep f
Leadership skills
reneur
start b s wh o
usines
within ses fai
the fir l
Self Belief month st 18
s!
Risk taker
Jonathon is an
intrapreneur.  He gets to
have creative control at
Apple, but also gets the
security that comes with
working at a large
organization.
RESEARCH TASK: ENTREPRENEURS/INTRAPRENEURS AND THEIR
INNOVATIONS
Work in pairs to research and write a
paragraph describing a famous entrepreneur
or intrapreneur and outline the innovation(s)
made by him/her.
Include the following details:
A. name and background (work history)
B. what led to the innovation
C. the innovation itself
D. the effect of the innovation
E. how can you improve their innovation?
This Photo by Unknown Author is licensed under CC BY-NC-SA
 REASONS FOR
STARTING UP A Page 10

BUSINESS
 REASONS FOR STARTING A
BUSINESS
LIST AS MANY REASONS AS YOU CAN FOR STARTING A BUSINESS, EXPLAIN EACH
REASON.
TERM DEFINITION
 REASONS FOR STARTING A BUSINESS

1. Rewards
2. Independence
3. Necessity
4. Challenge
5. Interest
6. Finding a gap
 STARTING UP
A BUSINESS
Need: the business idea, planning.
Either market-driven (determined by the
needs of the market), or service/product
driven (the business must convince others
that the product/service is worth
purchasing.
Planning – plan the business to reduce the
risks

Establishing
Organizing Researching Planning the Raising the Testing the
legal
the basics the market business finance market
requirements
 ORGANIZING THE BASICS
The entrepreneur must answer the following:
1) Location?
2) How to name it?
3) Business structure?

Organizing Researching Planning the

Establishing
legal
Raising the Testing the
the basics the market business
requirements
finance market
 RESEARCHING THE MARKET
Why do market research?
distinguish the business from others in the market.

entrepreneur needs to answer:

1) how to conduct market research?
2) target market?
3) test its concept?
4) unique selling proposition?
5) How will it conduct marketing?
Researchin Establishing
Organizing Planning the Raising the Testing the
the basics g the business
legal
finance market
requirements
market
 PLANNING THE BUSINESS

Business Plan
a document that discusses all issues that must be planned before operations begin.
purpose of a business plan?
-to build confidence in banks and potential investors.
-get organized, stay on track, prepare for future

Establishing
Organizing Researching Planning the legal Raising the Testing the
the basics the market business requirement
s
finance market
 ESTABLISHING LEGAL
REQUIREMENTS
1. What Local, State & Federal laws must be followed?
2. Register the business in your state/county
3. tax requirements?

Establishing
Organizing Researching Planning the Raising the Testing the
the basics the market business legal finance market
requirements
 RAISING THE FINANCE
1) Who will be the lenders for the
business?
2) What kinds of terms will they want?

Organizing Researching Planning the

Establishing
legal
Raising the Testing the
the basics the market business
requirements finance market
 TESTING THE MARKET
1) How will the business begin?
2) Will the business begin on a small scale to test consumer
reaction?
3) What is the criteria to determine success on a small scale?

Establishing Testing
Organizing Researching Planning the legal Raising the
the basics the market business requirement finance the
s market
ACTIVITY
In pairs, discuss and number the 6 stages in creating a business below, in the correct
order.
____a. Planning the business
____b. Raising the finance
____c. Testing the market
____d. Organizing the basics
____e. Establishing legal requirements
____f. Researching the market
 PROBLEMS A NEW BUSINESS
MAY FACE
Research and discuss the types of challenges that an entrepreneur could face in this stage.
START UP STEP PROBLEMS FACED

finance

manpower

costs

LEGAL
REQUIREMENTS

marketing

THE MARKET
 PROBLEMS A NEW BUSINESS MAY FACE

1. Lack of finance (cash flow problems)

2. Lack of manpower
3. Legalities too complex in some countries
4. High production costs
5. External issues in economy.
6. Poor marketing
7. Poor market research
8. Production issues
 There are 6 elements of a
business plan

1) the business idea, aims,

objectives
2) business organization
3) HR
4) Finance
5) marketing
THE ELEMENTS OF A 6) operations
BUSINESS PLAN
BUSINESS AIMS VS BUSINESS
OBJECTIVES
business aim: where the business wants to go in the future, its goals.
It is a statement of purpose, e.g. we want to grow the business into
Europe. (long term)

Business objectives: measurable targets of how to achieve business

aims. E.g. we want to sell 1 million phones every 3 months.
 6 ELEMENTS OF THE
BUSINESS PLAN
The Business Idea, aims and objectives
Setting out the business idea in the right context (why will it be successful?)
Business organization
How the business will be organized (location, structure, type of business, decision maker, profit sharing
etc)
HR
How the business will be staffed (employees, positions, HR plan, contracts)
Finance
How the business will be financed (Who, how much, from where, budget)
Marketing
How best to market the product (market research, sales forecast, product distribution, advertising)
Operations
 Choose one of the following businesses:

1) local café or restaurant

STUDENT 2) manufacturer of a new energy drink

CLASSRO 3) travelling barber

OM TASK
1.2 4) after school sports club

Work in groups to create a business plan for your new business.

Divide the steps between you and write down at least 5 bullet
points for each step. (PRESENT TO CLASS)
 REVISION QUESTIONS
1. What 3 resources do businesses combine to produce goods and services?
2. ________ resources are the people needed to carry out the aims of the organization. ___________
resources include buildings, machinery and raw materials. _________ resources include the money
needed to make the product or service.
3. What are the 4 sectors of business activity?
4. Who is an entrepreneur?
5. Who is an intrapreneur?
6. What are the reasons for starting up a business?
7. What are the steps for starting a business?
8. What kinds of challenges can a new business face?
9. What are the elements of a business plan?