MGT O 51 Introduction to Business1 Chapter1 Fundamentals

MGT O 51 - - Introduction to Business-1 Chapter-1; Fundamentals of Business Organizations (Week-1) Semester: Fall-2011 Instructor: XXXXX

Learning Outcomes for the week At the end of the week, you will be able to • Explain what are needs and wants • Understand what is an economic problem • Explain what “business’ is • Explain the aims of business EEA-Introduction to Business-MGT 051 -Part -A 2

What are needs ? • Needs are goods (products) or services essential for living. For example, water, food, clothing and shelter. EEA-Introduction to Business-MGT 050 -Part -A 3

What are wants ? • Wants are goods (products ) or services which people would like to have, but not essential for basic living. • People’s wants are unlimited. • For example: a luxurious house, an expensive car (the list is endless) EEA-Introduction to Business-MGT 050 -Part -A 4

In-class-Group Activity • From the following list, decide which are needs and which are wants: – Luxury car – Pepsi – Water – Clothing – Jewelry – Movies EEA-Introduction to Business-MGT 050 -Part -A 5

The economic problem • The economic problem results from being unlimited wants but limited resources to produce the goods and services to satisfy those wants. • This creates scarcity (Few factors of production) EEA-Introduction to Business-MGT 050 -Part -A 6

Factors of production 1. 2. 3. 4. Land Labor Capital Entrepreneur EEA-Introduction to Business-MGT 050 -Part -A Entrepreneur 7

What is “business” ? • A business is a commercial activity of combining factors of production (Land, Labor, Capital) to make products (goods) and services which satisfy human needs and wants. Commercial= profit-making (Earning money). Factors of production Goods 050 -Part EEA-Introduction to Business-MGT -A Services 8

This is what “business” is…. Factors of production Goods Services Satisfied Customers Profit EEA-Introduction to Business-MGT 050 -Part -A 9

What are the aims of business EEA-Introduction to Business-MGT 050 -Part -A 10

What are the aims of business • The aims are ends or goals that business wants to achieve. The aims of all business organizations are to • Make profit • Achieve business survival • Achieve business growth • Provide service to community EEA-Introduction to Business-MGT 050 -Part -A 11

Activity-Group Discussion • Make a list of popular business organizations in Saudi Arabia, state the name of the company, products and services and goals of the company. EEA-Introduction to Business-MGT 050 -Part -A 12

Making profit • When a business is owned by private individuals, it is run to make only profit. EEA-Introduction to Business-MGT 050 -Part -A 13

Survival is all about running your business in spite of tough competition in the market and slowdown in economy. EEA-Introduction to Business-MGT 050 -Part -A 14

Business growth • The owners and managers of businesses always aim for the growth in the size of business by – offering new products or services – Achieving growth in sales – Obtaining cost savings from business expansion EEA-Introduction to Business-MGT 050 -Part -A 15

Business growth Increasing sales / profit Introducing new products Cutting the cost Opening new businesses EEA-Introduction to Business-MGT 050 -Part -A 16

Provide service to community EEA-Introduction to Business-MGT 050 -Part -A 17

Other aims of business • • Market leadership Gaining goodwill Produce quality products and services Do business ethically Provide employment Fair dealing with employees Production according to national priorities Promote exports of the country EEA-Introduction to Business-MGT 050 -Part -A 18

Difference between a goal and an objective • Goals are long-term aims that a business want to accomplish, for example, The company wants to achieve high profits. • Business objective is a step you need to take in order to achieve a certain aim or goal. • Objectives are how you are going to achieve your goals and who would do what when and how, For example, the company wish to gain 20 percent profit this month. EEA-Introduction to Business-MGT 050 -Part -A 19

In-Class Activity- Group Discussion • Explain what is likely to be the main objective of the managers for each of the following businesses: – A government owned hospital which serves the patients of the country. – A large soft drinks company which dominates the market in the country. – The biggest retail store, owned by two young ambitious entrepreneurs. EEA-Introduction to Business-MGT 050 -Part -A 20

Summary of learning • A need is a good or service essential for living. • A want is a good or service which people would like to have. • The economic problem results from having unlimited wants but limited resources to produce the goods and services to satisfy those wants. • Land, Labor and capital are called factors of production. EEA-Introduction to Business-MGT 050 -Part -A 21

Summary of learning • Business is a commercial activity of combining factors of production (Land, Labor, Capital) to make products (goods) and services which satisfy human needs and wants. • The aims are ends or goals that a business wants to achieve. The aims of all business organizations is to make profit, achieve business survival, growth and provide service to community. • Business objective is a step you need to take in order to achieve a certain aim or goal. EEA-Introduction to Business-MGT 050 -Part -A 22

VOCABULARY ARE YOU SURE YOU KNOW THESE TERMS NOW? • • Business Factors of production Product Service Need Want Capital Entrepreneur EEA-Introduction to Business-MGT 050 -Part -A 23

VOCABULARY ARE YOU SURE YOU KNOW THESE TERMS NOW? • • • Profit Commerce Aim / Goal Objective Mission Vision EEA-Introduction to Business-MGT 050 -Part -A 24

Learning Review • List the four factors of production. • Goals and objectives are same. True / False • State three benefits of business activity to society. • Give two examples of business objectives EEA-Introduction to Business-MGT 050 -Part -A 25

Topics for the next week • Business as a means of distributing wealth • Business management as a profession • Forms of business organizations based on the ownership EEA-Introduction to Business-MGT 050 -Part -A 26

Any Questions ? EEA-Introduction to Business-MGT 050 -Part -A 27

Resources for the week. • Chris J. Nuttall, Business Studies: IGCSE (Cambridge International Examinations), Cambridge press 2011. • Cotton et al, Market Leader, . Course Pack (will contain articles and selected chapters from textbooks) • Rob Jones Edexcel IGCSE Business Studies Student Book, Pearson Publications 2010. • http: //www. wharton. upenn. edu/what_is_business/stories/allsto ries. htm • http: //www. bbc. co. uk/schools/gcsebitesize/business/aims/ EEA-Introduction to Business-MGT 050 -Part -A 28