BUSINESS AND FINANCE

Department: Statistics and Analysis

Lecturer: Nguyen Thi Thu Huong
 INTRODUCTION
Number of credits: 3 (36,9)
Structure:
Lecture hours: 36
Discussion hours: 9
Self-study hours: 90
 CONTENTS OF SUBJECT
CHAPTER • BUSINESS MANAGEMENT
1
CHAPTER • BUSINESS STRUCTURES AND STRATEGY
2
CHAPTER • RISK MANAGEMENT
3
CHAPTER • THE BUSINESS’S FINANCE
4
CHAPTER • CORPORATE GOVERNANCE
5
CHAPTER 1: BUSINESS MANAGEMENT

• INTRODUCTION TO BUSINESS
1.1

• MANAGING A BUSINESS
1.2
1.1. INTRODUCTION TO BUSINESS
1.1.1. Introduction to an organization

A motorbike manufacturer
An accountancy firm Profit-oriented
A travel Agency

A charity
A local authorityNot-for-profit
An army
1.1. INTRODUCTION TO BUSINESS
1.1.1. Introduction to an organization

What is an organization?
A social arrangement for the controlled
performance of collective goals, which has a
boundary separating it from its environment.

Organization enable people to be more productive

1.1. INTRODUCTION TO BUSINESS
1.1.1. Introduction to an organization

How do organizations differ?

- Ownership
- Activity
- Profit or non-profit orientation
- Size
- Legal status
- Source of finance
1.1. INTRODUCTION TO BUSINESS
1.1.2. Introduction to a business

What is a business?
An organization that is oriented towards making a
profit for its owners so as to maximize their wealth
and that can be regarded as an entity separate
from its owners
1.1. INTRODUCTION TO BUSINESS
1.1.3. Stakeholders in the business

Stakeholder is a person or group of persons who

has a stake in the organization. This means that
they have an interest to protect in respect of what
the organization does and how it performs.
1.1. INTRODUCTION TO BUSINESS
1.1.3. Stakeholders in the business

A company’s primary stakeholders are its

shareholders
A company’s secondary stakeholders are
directors/managers, employees, customers,
suppliers, lenders, government and its agencies,
the local community, the publics at large and the
natural environment.
1.1. INTRODUCTION TO BUSINESS
1.1.3. Stakeholders in the business

Stakeholders What is at stake? What do they typically

expect of the business
Directors/managers, Livelihoods, careers and Fair and growing
Employee and trade reputations remuneration; Career
unions progression; safe
working environment;
training; pension
Customers Their custom Products/services that
are of good quality and
value; fair terms of
trade; continuity of
supply
1.1. INTRODUCTION TO BUSINESS
1.1.3. Stakeholders in the business

Stakeholders What is at stake? What do they typically

expect of the business
Suppliers The items they supply Fair terms of trade;
prompt payment;
continuity of custom
Lenders Money lent A return on their
investment (interest,
repayment of capital)
Government and its National infrastructure Reasonable employment
agencies used by business; the and other business
welfare of employees; practices; compliance
tax revenue with regulations; steady
or rising stream of tax
revenue
1.1. INTRODUCTION TO BUSINESS
1.1.3. Stakeholders in the business

Stakeholders What is at stake? What do they typically

expect of the business
The local community and National infrastructure Reasonable employment
the public at large used by business and other business
practices
The natural environment The environment shared Reasonable
by all environmental and other
business practices
1.1. INTRODUCTION TO BUSINESS
1.1.4. Business objectives
One primary
Profit maximization
objective
A hierarchy
objective

Market position

Product
development
A series of
secondary objective
Technology

Employees and
management
1.1. INTRODUCTION TO BUSINESS
1.1.4. Business objectives

• “the business’s basic function in society” expressed

Mission in terms of how it satisfies its various stakeholders

Goals • A desired end result

• State what should be done to achieve the

Plans operational objectives

Standards • Specify a desired level of performance

1.2. MANAGING A BUSINESS
1.2.1. Definition of management

Management means “getting things done through

other people” (1)
In a business managers act on behalf of owners
(shareholders). (2)
In a public sector organization, managers act on
behalf of government (3)
1.2. MANAGING A BUSINESS
1.2.2. Power, authority, responsibility, accountability and
delegation
Power

The ability to get things done

Authority

The right to do something, or to ask someone else to do it and expect it to be done

Responsibility

The obligation a person has to fulfill a task which he/she has been given

Accountability

A person’s liability to be called to account for the fulfillment of tasks he/she has been given by persons
with a legitimate interest in the matter

Delegation

A management may make subordinates responsible for work, but remains accountable to his or her own manage
for ensuring that the work is done, that he/she retains overall responsibility
1.2. MANAGING A BUSINESS
1.2.2. Power, authority, responsibility,
accountability and delegation
Power
Base of power Description
Coercive power The power of physical force or punishment
Reward (resource) power Based on control over valued resources
Legitimate (position) power Associated with a particular position in the
organization

Expert power Based on experience, qualifications or

expertise

Referent (personal) power Based on force of personality which can

attract, influence or inspire other people

Negative power The power to disrupt operations

1.2. MANAGING A BUSINESS
1.2.3. Types of managers

- A line manager
- A staff manager
- A functional manager
- A project manager
1.2. MANAGING A BUSINESS
1.2.3. Types of managers
- A line manager has authority over a
subordinate
- A staff manager has authority in giving
specialist advice to another manager or
department, over which they have no line
authority.
1.2. MANAGING A BUSINESS
1.2.3. Types of managers

- A functional manager has functional authority,

a hybrid of line and staff authority, whereby the
manager has the authority, in certain
circumstances, to direct, design or control
activities or procedures in another department.
(1)
- A project manager has authority over project
team members in respect of the project in
progress. (2)
1.2. MANAGING A BUSINESS
1.2.3. The management hierarchy and process

Management hierarchy

Top managers: managing Few in number, responsible for overall direction

the business and performance of the business

Middle managers: managing Many, responsible for ensuring performance

managers targets are met by first-line managers

First-line managers: managing staff Numerous, responsible for ensuring direct

on direct operations operational staff do what is required

Very numerous, accountable to first-line

Direct operational staff: doing the work
managers for getting the job done
1.2. MANAGING A BUSINESS
1.2.3. The management hierarchy and process

The management process

Controlling Leading (4)
Planning (1) Organizing (2) (3)
- Pinpointing specific - Defining what Managers monitor Managers generate effort
aims processes, technology events so they can be and commitment
- Forecasting what is and people are required compared with the plan towards meeting
needed - Allocation and and remedial action can objectives,
coordinating work be taken if require
- Looking at actual and
potential resources
- Developing objectives,
plans and targets
- Using feedback from
the control part of the
process to make
necessary amendments
to the plan
1.2. MANAGING A BUSINESS
1.2.5. Managerial roles

- The informational role: Checking data received and

passing it on to relevant people as well as acting as
the spokesperson for his/her team in relation to
other teams or his or her own manager
- The interpersonal role: acting as leader for his/her
own team, and linking with the managers of other
teams
- The decisional role: managers actually do what we
perceive as managing.
1.2. MANAGING A BUSINESS
1.2.5. Managerial roles

- The decisional role:

+ Allocate resources to operations
+ Handle disturbances
+ Negotiate for what they need
+ Solve problems that arise
+ Act as entrepreneur
1.2. MANAGING A BUSINESS
1.2.6. Business functions

- Marketing
- Operations/production
- Human resources
- Finance
1.2. MANAGING A BUSINESS
1.2.6. Business functions

A. MARKETING MANAGEMENT
- Marketing is the set of human activities directed at facilitating and
consummating exchanges. It therefore covers the whole range of a
business’ activities
OR
- Marketing is the management process which identifies, anticipates
and supplies customer requirements efficiently and profitably
- Marketing mix is the set of controllable marketing variable that a
firm blends to produce the response it wants in the target market.
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Marketing mix
The marketing mix for tangible products is the
four Ps:

Product Price
Marketing mix

Place Promotion
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Marketing mix
The marketing mix for tangible products is the four Ps:
Quality of the product as
perceived by the potential
customer. This involves an PRODUCT Price
assessment of the product’s
suitability for its stated Marketing
purpose, its aesthetic factors, mix
its durability, brand factors,
packaging, associated service, Place Promotion
…
1.2. MANAGING A BUSINESS
1.2.6. Business functions

P - Product
There are three main elements of a product :
• Basic ( or core) product: the basic benefits that
the product satisfies customers' needs
• Actual product: product's tangible ingredient
• Augmented product: additional services or
benefits of the product
1.2. MANAGING A BUSINESS
1.2.6. Business functions

P - Product
General factors to be considered when taking a product
from basic to actual and augmented include the following:
• Quality and reliability
• Packaging
• Branding
• Aesthetics
• Product mix
• Servicing / associated services
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Marketing mix
The marketing mix for tangible products is the four Ps:

Prices to the customer,

Product PRICE discount structures for
Marketing the trade, promotion
mix pricing, methods of
Place Promotion purchase, alternatives
to outright purchase
1.2. MANAGING A BUSINESS
1.2.6. Business functions

P - Price
Influences on the business’s pricing policy:
• Costs
• Competitors
• Customers
• Corporate objectives
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Marketing mix
The marketing mix for tangible products is the four Ps:

Advertisement of a
Product Price product, its sales
promotion, the
Marketing mix company’s public
Place PROMOTION relations effort,
salesmanship
1.2. MANAGING A BUSINESS
1.2.6. Business functions

P - Promotion
There are 5 main types of promotion:
• Advertising
• Sales promotion
• Public relations
• Direct marketing
• Personal selling
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Marketing mix
The marketing mix for tangible products is the four Ps:
Distribution channel
decisions, website selling
Product Price
(e-tailing), location of
outlets, position of Marketing
warehouses, inventory mix
levels, delivery frequency,
PLACE Promotion
geographic market
definition, sales territory
organization
1.2. MANAGING A BUSINESS
1.2.6. Business functions
P - Place (distribution)
Producer Consumer

Wholesaler
Producer Retailers Consumers
s
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Marketing mix
The marketing mix for services products is the three Ps:
Processe
s
Physical
People
evidence

Marketing
mix
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Marketing mix
The marketing mix for services products is the three Ps:

Peopl The people employed by the service

deliverer are uniquely important given they
e are likely to have regular interactions with
customers. Service businesses therefore
need to have excellent recruitment and
selection policies, good training
programmes, standard consistent
Marketing operational procedures, the flexibility to
mix enable staff to give good service, and
effective motivational programmes.
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Marketing mix
The marketing mix for services products is the three Ps:
These often determine the structure of
Processe the “service encounter”. There are some
s important moments of truth that
determine how effective a service is, such
as enquiries and reservations before the
service is granted, registration
Marketing procedures, timing of when the service is
mix consumed and what happens after the
service has been consumed
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Marketing mix
The marketing mix for services products is the three Ps:
Physical
evidenc This refers to items that give
e physical substance such as
logos, staff uniforms and store
layout/design – it gives the
customer who buys a service
Marketing “something to show for it”
mix
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Marketing segmentation
Marketing segmentation is the division of into
homogeneous groups of potential customers who
may be treated similarly for marketing purposes
Segment of market Target segment by placing most emphasis on
High income groups Promotion – to create the image of quality, status

Families with children Product – size, safety

Low income groups Price – low: Product – reliability, economy

1.2. MANAGING A BUSINESS
1.2.6. Business functions

Marketing orientation
A marketing-oriented business is one which
accepts the needs of potential customers as the
basis for its operations. Its success is seen as being
dependent on developing and marketing products
that satisfy those needs.
1.2. MANAGING A BUSINESS
1.2.6. Business functions
B. ORPERATIONS MANAGEMENT
Creating as required the goods or services that the
business is engaged in supplying to customers by
being concerned with the design, implementation
and control of the business’s processes so that
inputs (materials, labor, other resources,
information) are transformed into output products
and services.
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Operations management
“Four Vs” of operations:

Volume Variety
Operations
management
Visibility Variation
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Operations management
1. VOLUME: Operations differ in the volume of inputs they
handle and the volume of output they produce
• High volume might lend itself to a capital-intensive
operation, with specialization of work and well-established
systems for getting the work done. Unit costs should be low.
• Low volume means that each member of staff will have to
perform more than one task, so that specialization is not
achievable. Unit costs of output will be higher than with a
high volume operation.
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Operations management
2. VARIETY: This refers to the range of products or services
an operation provides, or range of inputs handled.
• High variety: the operation needs to be flexible and
capable of adapting to individual customer needs. The
work may therefore be complex, and unit costs will be
high.
• Low variety: the operation should be well-defined, with
standardization, regular operational routines and low
unit costs.
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Operations management
3. VARIATION : Demand might vary with the time of the year or
even the time of the day. Variations in demand might be
predictable, or unexpected, and in degree it may be highly variable
or not so variable at all
• High variation: the operation has a problem with capacity
utilization so it will try to anticipate variations in demand and
alter its capacity accordingly. Unit costs are likely to be high
because facilities and staff are under-utilized in off-peak periods.
• Low variation: the operation should achieve a high level of
capacity utilization, and unit costs will accordingly be lower
1.2. MANAGING A BUSINESS
1.2.6. Business functions
Operations management
4. VISIBILITY: This is the extent to which an operation is exposed to its
customers, and can be seen by them. Some operations are partly visible
to the customer and partly invisible: this distinction is often made in
terms of “front office” operations.
• High visibility calls for staff with good communication and inter-
personal skills. More staff are needed and so the operation is more
expensive to run. Customer satisfaction with the operation will be
heavily influenced by perception, and staff need high customer
contact skills. Unit costs of a visible operation are likely to be high.
• Low visibility means that there is a time lag between production and
consumption, allowing the operation to utilize its capacity more
efficiently. Customer contact skills are not important, and unit costs
should be low
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Research and development

R&D function may involve pure research and/or applied
research and/or development
Pure research: Original research to obtain new scientific or
technical knowledge or understanding. There is no obvious
commercial or practical end in view.
Applied research: research which has an obvious commercial or
practical end in view.
Development: the use of existing scientific and technical
knowledge to produce new products or systems, prior to
starting commercial production operations
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Procurement
The acquisition of goods and/or services at the
best possible total cost of ownership, in the right
quantity and quality, at the right time, in the
right place and from the right source for the
direct benefit or use of the business
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Procurement
Procurement mix comprise four elements

Quantity Quality
Procurement mix
Lead time Price
1.2. MANAGING A BUSINESS
1.2.6. Business functions

C. HUMAN RESOURCE MANAGEMENT

The creation, development and maintenance of
an effective workforce, matching the requires of
the business and responding to the environment.
1.2. MANAGING A BUSINESS
1.2.6. Business functions

Model of HRM
The Harvard four Cs model of HRM

Commitment Competence
HRM MODEL
Cost- Congruence
effectiveness