Business Key Elements and Functions What Is a Business? An - PowerPoint PPT Presentation

Business Key Elements and Functions

What Is a Business? An individual or organization that tries to earn a profit by providing products/services that satisfy people’s needs

The People and Activities of Business Activities: People: Management Owners Manufacturing Employees Operations Customers Marketing Other stakeholders: Finance Investors Regulatory Agencies

Types of Resources Used by Business  Natural  land, forests, etc. (not made by people)  Material  raw materials, components, utilities  Human  physical/mental abilities used by people to produce goods and services  Financial  funds necessary to acquire needed natural and human resources

What Is an Economic System?  The way a society distributes its resources to produce goods and services.  Addresses the issue of how to fulfill unlimited demand with limited supply of resources.

Basic Questions to Be Asked of Economic Systems  What goods and services and what quantity will satisfy the needs of the consumer?  How will the goods and services be produced?  Who will produce them and with what resources?  How are the goods and services to be distributed to the consumer?

The Three Basic Types of Business Organizations The Sole Proprietorship: Grocery Shop The Partnership: CA’s, Architects, Lawyers The Corporation: Reliance, Infosys, Ideaforge,

Management A process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment.

The Functions of Management Managers Organizing Staffing Directing Controlling Planning resources and the employees’ the activities to activities to organization activities organization’s achieve the achieve the with qualified toward activities organization's organization’s people achievement to keep it objectives objectives of objectives on course

Areas of Management  Financial Management  Production and Operations Management  Human Resources Management  Marketing Management  Administrative Management

Steps in the Management Decision Making Process Recognize and Develop Analyze Define the Options Options Decision Situation Select the Implement Monitor the Best Option the Decision Consequences

The Reality of Management There are Only Two Basic Activities of Management: 1. Figuring out what to do despite uncertainty, great diversity, and an enormous amount of potentially relevant information, and, 2. Getting things done through a large and diverse set of people despite having little direct control over most of them.

The Reality of Management There are Only Two Basic Activities of Management: 1. Figuring out what to do despite uncertainty, great diversity, and an enormous amount of potentially relevant information, and, 2. Getting things done through a large and diverse set of people despite having little direct control over most of them.

Operations Management (OM) The development and administration of the activities involved in transforming resources into goods and services. Inputs Transformation Outputs land or Conversion goods labor procedures services capital equipment ideas raw facilities materials technology time knowledge information energy Control Customer (Feedback) standards The Transformation Process

The Steps in Planning and Designing Operations Systems 1. Planning the Product 2. Designing the Operations Process a. Standardization b. Modular Design c. Customization 3. Planning Capacity

The Steps in Planning and Designing Operations Systems 4. Planning Facilities a. Facility Location b. Facility layout 1. Fixed-Position Layout 2. Project Organization 3. Process Layout (intermittent organizations) 4. Product Layout (continuous manufacturing organization)

The Steps in Planning and Designing Operations Systems c. Technology 1. CAD 2. CAM 3. Flexible Manufacturing 4. CIM Foxconn onn is is the e larges est deployer loyer of robot obots in the e world. ld.

Managing the Logistics of OM Purchasing Management Inventory Control Management Routing and Scheduling Distribution Management

Managing the Logistics of OM The objectives of “procurement”: 1. Buying the right items 2. Obtaining desired quality 3. Buying the right quantity 4. Paying the lowest price 5. Obtaining inventory at the right time

A Hypothetical PERT Diagram for Making a McDonald’s Big Mac Grill ll beef patties ies (120) Remove ve buns, , 2 2 beef patties, ies, cheese, se, sauce sauce, , lettu tuce, ce, Start 6 7 1 4 5 8 E onions, ns, n pickle kle d (20) Place Top Place Place Serve to 3 cooked with Big Mac in package customer patties cheese package in heated (5) on bun and (5) bin Apply ly (5) vegetables (5) sauce (15) to bun (10) 5 (185) Time to complete Critical path Activity Event event (seconds)

A Hypothetical PERT Diagram for Making a McDonald’s Big Mac Grill ll beef patties ies (120) Remove ve buns, , 2 2 beef patties, ies, cheese, se, sauce sauce, , lettu tuce, ce, Start 6 7 1 4 5 8 E onions, ns, n pickle kle d (20) Place Top Place Place Serve to 3 cooked with Big Mac in package customer patties cheese package in heated (5) on bun and (5) bin Apply ly (5) vegetables (5) sauce (15) to bun (10) 5 (185) Time to complete Critical path Activity Event event (seconds)

The Exchange Process: Giving Up One Thing in Return for Another The nature of marketing is to create value by allowing people and organizations to The value the obtain what they need and want. customer Something of Value derives is more (money, than the price credit, paid labor, goods) Buyer Exchange Seller The act of giving (goods, up something services, (money, credit, The price the ideas) labor, goods) in producer Something of Value return for derives is more something else than the cost (goods, services, incurred or ideas).

Marketing Creates Utility Utility: A product’s ability to satisfy human needs and wants.  Place Utility  Time Utility  Ownership Utility  Form Utility Functions of Marketing  Buying  Grading  Selling  Financing  Transporting  Marketing Research  Storing  Risk Taking

The Marketing Concept The idea that an organization should try to satisfy customer’s needs through coordinated activities that allow it to achieve its own goals (profit). FAST FACT: Trying to determine a customer’s true needs is difficult because no one fully understands what motivates people to buy.

Developing Marketing Strategy  Marketing Strategy:  A plan of action for developing pricing, distributing and promoting products that meet the needs of specific customers.  The Two Major Components:  Selecting a Target Market  Developing the Appropriate Marketing Mix A target market is a A market is a group of more specific group of people who have a need, consumers on whose purchasing power, and the needs and wants a desire and authority to company focuses its spend money on goods, marketing efforts. services, and ideas.

Market Focus Market Segmentation: A strategy to divide the total market into groups of people who have relatively similar product needs. A Market Segment: A collection of individuals, groups, or organizations who share one or more characteristics and have similar product needs and desires. Niche Market Narrow market segment focus when efforts are on one small, well- defined segment that has a unique, specific set of needs. Bases for Segmenting Markets  Demographic  Geographic  Psychographic  Behavioristic

Developing the Marketing Mix: Product, Price, Promotion, and Distribution A good, service, or idea that has tangible and intangible attributes that provide satisfaction and benefit to consumers. A persuasive form Product of communication that attempts to A value placed expedite a on a product or marketing service that is Price exchange by Promotion exchanged Customer influencing between a buyer individuals and and seller. organizations to accept goods, Distribution services, and ideas. Making products available to consumers in the quantities and locations desired.

Marketing Research & Information Systems Marketing Research: A systematic, objective process of getting customer information to guide marketing decisions. Marketing Information System: A framework for assessing information about customers from internal and external sources. Primary Data Secondary Data Buying Behavior The decision processes and actions of people who purchase and use products. Psychological Variables Social Variables Social Roles Perception Reference Groups Motivation Social Classes Learning Culture Attitude Personality

Classifying Products Consumer Products Industrial Products Convenience Products Raw Materials Products bought frequently without a lengthy search and Major Equipment bought for immediate consumption. Accessory Equipment Shopping Products Component Parts Products purchased after buyer has compared competitive Processed Materials products. Specialty Products Supplies Products that the buyer Industrial Services searches for and makes a special effort to obtain.