The Role of A Business in Combining Resources

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The role of a business in combining resources
The role of business is to combine human, physical and financial resources to
create
goods and services.

Needs are the basic necessities that people must have ot survive, such as food,
water, warmth, shelter and clothing. Wants are people's desires, i.e. the things
they would like to have, such as a larger home, a new smartphone, an overseas
holiday or a birthday cake.

Functions of a business
Human resources
• Manages personnel of the organisation.
• Deals with: workforce planning, recruitment, training, appraisal, dismissals and
redundancies, and outsourcing human resource strategies.
Finance and accounts
• Manages the organisation’s money.
• Deals with: reporting and recording financial records, abiding by legal
requirements (e.g., tax), produces final accounts.
Marketing
• Identifies and satisfies the needs and wants of customers.
• In charge of ensuring that a firm’s products sell.

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• Deals with: market research, test marketing, advertising and branding.
Operations (management)
• Converts raw materials and components into finished goods.
• For a service this can be the process of giving that service.

Business sectors
Primary sector
• The extraction, harvesting, and conversion of natural resources.
• Most prevalent in LEDCs. Primary sectors in MEDCs use more automated
methods.
• The primary sector has little added value.
• Examples: coal mining, vegetable harvesting.

Secondary sector
• Manufacturing or construction of products by transforming the raw materials
produced in the primary sector.
• Economically developing countries tend to dominate this sector.
• Examples: clothing production, car manufacturing.

Tertiary sector
• Provides services to the general population.
• Tend to be dominant in MEDCs.
• Examples: haircuts, taxi service.

Quaternary sector
• A subcategory of the tertiary sector.
• Involved in intellectual, knowledge based activities that generate and share
information.
• Requires a highly educated workforce, and therefore is most prominent in
MEDCs.
• Example: law firms, training and development firms

Sectoral change

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A shift in the relative share of national output and employment that is attributed to
each
business sector over time.
As countries become more developed, they move towards secondary sectors, and
eventually tertiary and quaternary sectors.
Primary sector production yields low added value, in order to develop
economically, a
shift in business activity must occur to ave higher added value.

Reasons for sectoral change -


Higher household income: higher demand for services as people have available
money
to spend on ‘wants’.
More leisure time: with higher standards of living, people have more time/money
to
do recreational activities.
Greater focus on customer service: firms realise the importance of customer
service.
Increasing reliance on support services: businesses use more sophisticated
services
such as subcontractors and specialists to help the business grow.

Entrepreneurship vs. intrapreneurship


Entrepreneur an individual who plans, organises and manages a business,
taking on financial risks in doing so.
Intrapreneur the act of being an entrepreneur but as an employee within a
large organisation.

Entrepreneur Intrapreneur
• Owners/operators. • Employees of the organisation.
• Takes substantial risks. • Takes medium- high risks.
• Rewarded with profit. • Rewarded with pay.
• Failure incurs personal costs. • Failure absorbed by the organisation.
• Visionary. • Innovative.
• Responsibility for the workforce • Accountable to the owner

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Reasons for starting up a business (GET CASH)
• Growth.
• Earnings.
• Transfer and inheritance: used for something that they can pass on
(transference) to
their children (inheritance) to give them a sense of security.
• Challenge: drive to have personal satisfaction, being successful boosts self-
esteem.
• Autonomy: being your own boss, making decisions about the business, work
hours,
holidays etc.
• Security: if you are your own boss, you cannot be made redundant, dismissed,
or be
replaced with technology.
• Hobbies: just for fun, or because you are passionate about something.

Steps in the process of starting up a business


1. Write a business plan.

2. Obtain startup capital.

3. Obtain business registration.

4. Open a bank account.

5. Marketing

Problems that a new business might face


• Lack of finance.

• Cash flow problems.

• Marketing problems.

• Poor location.
• External influences: competition in the area, economic recession.

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• Unestablished customer base.

• People management problems: poor choice of employees or leadership.

• Legalities.

• Production problems.
• High production costs.

Elements of a business plan


• Details of the business and the owners.
• Information about the product.
• A preview of the market.
• Finance.
• Personnel and the workforce.
• Marketing of the firm/product.

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