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HBM1 - 14 Introduction To Business Management

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Hospitality Business Management 1

BUSINESS MANAGEMENT
FUNDAMENTALS
Some initial thoughts…
What is a Business?
 “A business is defined as an organization or
enterprising entity engaged in commercial,
industrial, or professional activities. Businesses
can be for-profit entities or non-profit
organizations that operate to fulfil a charitable
mission or further a social cause.” (Freeman, et.
al., 2019)

 “Business is that complex field of commerce and


industry in which goods and services are created
and distributed in the hope of profit with in a
Business continued..

 “business means any business of trade


established for the acquisition of gain and
carried on by any person, company,
association, syndicate or partnership, or by
the individual members of any company,
association, syndicate or partnership”
(Business Names Act, No. 27 of 1960)
What a business does

Produce or
offer Receive
product compensatio
Identify the
and/or
needs and n for
services that
wants of
aim to products
consumers and/or
satisfy the
needs and services
wants
So what do people need? Maslow’s
Hierarchy of needs
Factors of Production
 Land
 Anythingthat is taken from nature and used to produce
goods or services
 Includes actual land, water, fish, corn, bamboo, trees, etc.
 Broken into Renewable and Fixed resources
 Capital
 Has 2 different meanings
 “…monetary resources companies use to purchase natural
resource, land and other capital goods.”
 “…major physical assets individuals and companies use
when producing goods or services.”
 Can obtain capital through buying, renting, and developing.
Factors of Production
 Labour
 The human resource that is employed to facilitate the
production process.
 The combination of physical and mental resources applied
to tasks.
 Highly manageable and able to control
 Entrepreneurship
A managerial function that integrates all the factors of
production in the attainment of a goal.
 Itis a facilitation action that cannot itself be converted
into goods.
A fundamental aspect of business.
Management
 “Management is the creative and systematic
pursuit of practical results, (including the
result of more knowledge), by identifying
and using available human and knowledge
resources in a concerted and reinforcing
way.” (Koi-Akrofi, 2018)

 “theprocess of planning, organizing,


directing, and controlling resources to
achieve specific goals.” (Collins, 2012)
3 Aspects of Management
 Management is a social process: relationship and
interaction between people to help achieve
organizational goals.
 Management is an integrating process: ensures that
all other resources(physical, human, and financial)
are all brought together in harmony to achieve
organizational purpose.
 Management is a continuous process: It is a never
ending process. It is an ongoing process. It is always
aimed at finding problems and resolving them
The Economy
 “… the organisations and methods used
to determine what goods and services
are produced, how they are produced,
and for whom they are produced.”
(Tucker, 2017: 863)
 Theeconomy is the sum total of all the
transactions that take place within an
area such as a country, region, or even
the world.
 Video- How the economic machine
work by Ray Dalio
4 types of economic systems
 Traditional
 People only produce what they need to
survive
 Essentially a barter system
 Command
 “… an economy in which all factors of
production are government / state owned and
controlled, and all supply, demand and
pricing are planned by the government.
 Essentially a communist system
 Market
 “an economy that is characterised by the
“invisible hand” of market forces.” (Peng and
Meyer, 2016, 40)
 The Capitalist system – people are free to
produce their own products and services
 Mixed
 Containselements of both command and
market economic systems
 Government controls key aspects of the
economy such as electricity, rail networks and
primary resources, but in smaller sectors there
is less interference.
The 3 fundamental sectors of
the economy
 Primary:attainment of raw resources. E.g.
mining, timber, etc. Primarily unskilled labour
 Secondary: Transformation of raw materials
into products. E.g. wooden furniture,
jewellery, etc. Primarily semi-skilled labour
 Tertiary:Commercial services of selling good
and services. E.g. marketing and selling of
the furniture and jewellery. Mostly highly
skilled labour here.
The 3 tiers of the business
environment
 As discussed, there are two broad environments in
which a business exists: Internal and External
 Internallooks at the happenings and factors within
the business
 External looks at happenings and factors outside of
the business
 Inorder to help get an in-depth understanding on the
health and state of a business, 3 tiers have
 Micro-environment
 Market environment
 Macro-environment
Micro environment (internal
factors)
 Factors include  General departments
 Vision
and mission of the  General Management
business
 Purchasing
 Strategicgoals and
objectives  Logistics

 Organisational culture  Marketing


 Diversity  Finances
 Ethics  Human Resources
 Dealing with Change  Public relations
 Administrations
Market Environment (external
market factors)
 Thistakes an  Market Factors:
external perspective  Suppliers
but is limited to the  Publics (groups of
market in which the public)
business resides.
 Market intermediaries
 Focusses on the  Competitors
relationships with the
 Customers
environment
Macro Environment
(Environmental external
factors)
 Refers to the  Factors:
factors that are  Demographics
outside the direct  Economy
control of business  Natural
and industry.
 Technological
 Broad factors that  Political
can be nation or
worldwide

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