Introduction to Business

Management
Unit 1.1 IB Business
Learning Goals
● How a business combines human, physical and financial resources
● Functions of Business - HR, Finance, Marketing, Operations
● Sectors - Primary, secondary, tertiary
○ Changes to sectors
● Role of entrepreneurship and intrapreneurship
● Reasons for starting a business
● Steps in starting a business
● Problems faced by new business
● Elements of a business plan
Inputs
Raw Materials,
components, machinery,
equipment, labour
Inputs
Raw Materials,
components, machinery,
equipment, labour
Process
Turning inputs into
manufactured goods, or
provision of services
Inputs
Raw Materials,
components, machinery,
equipment, labour
Process
Turning inputs into
manufactured goods, or
provision of services
Outputs
The final goods or
services
 Apply The Theory
What are the potential inputs, processes & outputs for:
Group 1 - Furniture Manufacturer Group 2 - Sandwich Restaurant
 Furniture Manufacturer
Inputs Process Output
 Furniture Manufacturer
Inputs Process Output
 Furniture Manufacturer
Inputs Process Output
 Furniture Manufacturer
Inputs Process Output
How can we “Add Value” to inputs?
How can we “Add Value”
Feel good factor (buy from kids, made 24/7 Service Innovation
in Canada, supports a charity),
Delivery Specialization
Performance/quality
Prestige Customization
Perceived value
Atmosphere Free good/services
Customer service
Location More locations
Depth of products
Speed Brand awareness, etc
Variety of products (1 stop shopping)
Warranty
 Write Down Your Last 8 Purchases & Classify Them
Item Want or Good or
Need Service

Gasoline Need Good

Car insurance Need Service

New cell phone

Cell phone Bill

Bed set

Lunch

Shoes
 Write Down Your Last 8 Purchases & Classify Them
Item Want or Good or High or Low
Need Service Involvement

Gasoline Need Good Low Involvement

Car insurance Need Service Low* (It was high when first shopping, low now

New cell phone

Cell phone Bill

Bed set

Lunch

Shoes
 Write Down Your Last 8 Purchases & Classify Them
Item Want or Good or High or Low Durable, non,
Need Service Involvement semi? (For goods)

Gasoline Need Good Low Involvement Non

Car insurance Need Service Low* (It was high when first shopping, low now -

New cell phone

Cell phone Bill

Bed set

Lunch

Shoes
 Write Down Your Last 8 Purchases & Classify Them
Item Want or Good or High or Low Durable, non, Emotional or
Need Service Involvement semi? (For goods) Functional

Gasoline Need Good Low Involvement Non Functional

Car insurance Need Service Low* (It was high when first shopping, low now - Functional

New cell phone

Cell phone Bill

Bed set

Lunch

Shoes
 What are Capital Goods?

Have you heard of Grainger?

Probably not
They sell over 900,000 items, but you
are NOT the target market

In groups, brainstorm:
List businesses that rely most on the sale of consumer goods
List businesses that rely most on the sale of capital goods
List businesses that rely most on the sale of services
 It is now evident that people AND businesses have want and needs

What about government/communities?

Public Wants Public Needs

Leisure Housing
Landscaping in parks Healthcare
Festivals Infrastructure - roads, electric,
Casino - entertainment watershed
venues Law enforcement
Bike paths Agriculture
Public parks - tennis etc Sewage treatment
Salt for roads

What companies might identify government/communities as their target market?

 It is now evident that people AND businesses have want and needs

What about government/communities?

Public Wants Public Needs

Leisure Housing
Landscaping in parks Healthcare
Festivals Infrastructure - roads, electric,
Casino - entertainment watershed
venues Law enforcement
Bike paths Agriculture
Public parks - tennis etc Sewage treatment
Salt for roads

What companies might identify government/communities as their target market?

 Consumers are the people or
organizations who actually use a
product
Customers are the people or
organizations who buy a product

Apply this concept to

Tomatoes
Functions of Business (P2)
Business Sectors (P3)

Poll Everywhere Activity : On the map, click on a region that

has a HIGH PROPORTION of its labour force in the primary
sector.

Let’s check your

hypothesis on Gapminder
Role of Entrepreneurship (P6)

Entrepreneur: Individual who plans, organizes and manages a business, taking

on the financial risk in doing so.

Teen Entrepreneurs Video

Printable Canada- Summer Company - magic, bike repair, landscaping, pool

cleaning, VRX, cell phone parts, phone repair, music lessons, jewelry, car clubs,

photography and more ACS businesses from this grant

To entrepreneurs, problems represent opportunities

Characteristics of Entrepreneurs
Intrapreneurship (P6)

Intrapreneurship is the act of being an

entrepreneur but as an employee within a large

organization. Intrapreneurs think and act as an

entrepreneur within a section of an organization.

The intrapreneur is independent, proactive,

creative and generates new ideas and innovation

Examples of Intrapreneurship Success

Reasons for Starting a Business (7)

Growth Challenge
Earnings Autonomy
Transfer Security
Inheritance
Hobbies
Opportunity in
market
Steps in Starting Up a Business (P8)

1. Write a business plan

2. Obtain start up capital (Unit 3.1)
3. Obtain business registration
4. Open business bank account
5. Marketing (Unit 4)
Business Idea Feasible idea. Is it a market niche? What is the Unique Selling Point?

Finance Sources of finance. Record keeping. Accountant - outsource?

Human Resources Identify HR needs, recruit, select, train, motivate, compensate, evaluate, retain, etc

Enterprise Develop entrepreneurial skills

Fixed Assets Premises, capital requirements, location decisions (5.4)

Suppliers Raw materials, finished stock, support services. Negotiations with suppliers. Make

or buy inputs?

Customers Push or pull marketing, market research

Marketing Product, price, place, promotion

Legal Copyright, patents, consumer protection laws, by-laws, city/province/national

regulations and standards

 Whiteboard Activity #1
A business that is just beginning is referred to as a start-up.
They must often make expenditures that are not going to come up again any time soon

List a range of startup costs for a business

 Start Up Costs
Examples of start up costs

1. Premises (purchase cost, mortgage, deposits)

2. Buildings (alterations, fixtures, insurance, security cameras)
3. Capital equipment (furniture, phones, computers, machinery, tools, vehicles)
4. Legal and professional fees (cost of lawyers, licenses, permits)
5. Marketing Costs (research, advertising, promotions)
6. Human Resources (recruitment, selection, training, etc)
7. Initial inventory
8. Intellectual Property (Patents, trademark, copyright
 Whiteboard Activity #2
A business that is just beginning is referred to as a start-up.
They must often make expenditures on a routine basis

List a range of monthly operating costs for a business

 Operating Costs

Examples of start up costs

1. Premises (monthly mortgage, property tax)

2. Buildings (utilities, insurance, security)
3. Marketing Costs (advertising, promotions)
4. Human Resources (wages, salaries)
5. Replenish inventory
6. Office supplies (paper, ink, etc)
7. Facility maintenance (cleaning supplies, repairs, light bulbs)
 Whiteboard Activity #3
A business that is just beginning is referred to as a start-up.
Although problems vary, there are common obstacles that can be to starting a business.

What issues are particularly

challenging for startup companies?

Problems Faced by Startups (P10)

1. Lack of finance A business that is just beginning is referred to as a start-up. Although problems vary, there are common

2. Cash flow problems obstacles that can be to starting a business. The most notable of these is start-up finance.

3. Marketing problems During the initial phases of the business, the commercial enterprise will only experiences losses as no revenue is

4. Unestablished customer base being earned from sales at this early stage. However in order to begin operations the costs of legalizing the

5. People management problems business may include hiring professional organizations or lawyers. In addition filing fees, location costs,

6. Legalities production, labor and marketing costs, labor costs can all become enough of a reason why the business will want

7. Production problems to operate in the informal sector.

8. High production cost

9. Poor location If the market is dominated by large corporations and there may be other barriers to entry such a technical or

10. External influence regulatory barriers. New businesses may simply not have the ability to compete effectively on the basis of price

11. No established supply chain due to economies of scale achieved by large corporations, where the start-ups average costs of operation are too
high relative to revenue earned.

In addition, some countries have a very complex, lengthy and costly legalization process that serves to
discourage businesses from starting operations. Restrictions or excessive regulation will also curtail business
initiative.
 Elements of a Business Plan (P11)
The Business Name of business, Cost of premises, start-up costs, Form of ownership, Quantifiable goals

The product Details on the good/service, Why will customers buy it, Where production will occur, Details
on suppliers, Cost of production, Pricing strategies
The market Projected demand/sales level, Consumer profiles, Expected growth in future, Competition
analysis

The finance Sources of finance, Break even (3.3), Security (collateral), Cash flow projections, Profit/loss
projections, Forecast balance sheet, Rate of return on investment
The # of workers, job roles, Organizational structure (2.2), Details on payment systems
personnel
The Market research, test marketing, Distribution plans, Details of promotional mix, Unique selling
marketing point/differentiate
Who would be interested in seeing a business plan?
Units 1.4 Stakeholders
Which stakeholders would want to see your business plan?

Why is it relevant to their needs?

Business Plan & 1.4 Stakeholders
Stakeholder Needs
The Entrepreneur

Government

Shareholders/owners

Banks and lenders

Suppliers

Employees and
management

Landlord
Business Plan & 1.4 Stakeholders
Stakeholder Needs
The Entrepreneur Organize thoughts, idea, vision, keep them on track

Government Grant programs like Summer Company want to be sure the business is
viable

Shareholders/owners To protect their financial interests - can they make money?

Banks and lenders Will they be able to collect on the loan? What collateral can they post?

Suppliers They want to know if you will be a customer well into the future
They want to know if you are worthy of trade credit
Streamline functions - promote efficiency (Coke and sugar supplier)

Employees and Understand long term plans - know their jobs are secure
management

Landlord If you are leasing a commercial space, the landlord wants to know you
capacity to pay
1.1 Activity: Using the image that Mr. Bracken provides to
your group, identify how companies in that industry
might do the following:
● What inputs are required them to produce valuable outputs?
● Differentiate from their competitors
● Overcome the challenge of being a start-up
● Encourage intrapreneurship
● Do they provide goods, services or both?
● Do they satisfy consumer wants, needs or both?
● Do they encourage job specialization?
● What sector of the economy are they part of?
Opportunities for Entrepreneurs are everywhere!
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DELISLARAMA
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