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Fundamentals of Business


Fundamentals of Business Note: This copy of document was developed by for any further inquiries please visit our website.


Business terminologies

Management Marketing Production Ownership

Business Classification of business Types of business Business System Resources of business Management Levels of Management Functions of Management Marketing definition Production Process types of conversation process Product life cycle Type of organizations Ownership styles


2-4 4 5 6-7

Accounting World:

By. Gulam AL-Balushi


GuLaM.41 Business is Profit seeking activity that provides goods and services that satisfy consumer needs. It is all the Companies that provides goods and services that a society needs such as housing, food, communication, jobs and so on. ď Ž Objectives of business i. Profit motive‌.what is profit? Profit is the money left after all cost deducted from business revenue which is generated by selling goods and services. (Profit = Revenue – Cost). ii. iii.

The survival and growth objective The product or service objective.

Not for profit organizations: firms whose primary objective is something other than returning a profit to their owners. (E.g. universities, museums, schools) Classification of business A. Goods producing business: produce tangible goods by engaging in activities such as manufacturing, mining and agriculture. (E.g. PDO, Al Rawabi, Pepsi) B. Service providing business: produce intangible products (ones that cannot be held in your hand). These include business that provide services like utilities, insurance, transportation, health care, etc. (E.g. OmanTel) Types of business 1) Local business: it is a business carried on a small scale within the boundaries of the city or the state. This business does not have branches anywhere else. (e.g. small shops) 2) National business: it is a business carried out at national level; the business is operated within the boundaries of the nations. It does not have any branches outside the country (e.g.Omantel) 3) International business: are importers and exporters, they have dealers outside of their home country. e.g. Suhail Bahwan Automobiles (Toyota) 4) Multinational Corporation: This organization carries out production and distribution activities in a number of countries. E.g. McDonalds, Pepsi. Business System System is defined as a group of related parts working together towards a common objective. The business system the combination of various economic resources in an organized manner to produce the goods and services required. Economics is the study of how society uses scarce resources to produce and distribute goods and services. Economic system: Means by which a society distributes its resources to satisfy its people's needs.

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GuLaM.41 Resources of business In order to produce the goods and services, five essential resources are needed (factors of production). Factors of production: is the basic input that a society uses to produce goods and services, including: Natural resources:

Things those are useful in their natural state, such as land, forests and water.

Human resources:

anyone works in the company to produce goods and services

Capital: Entrepreneurs: Knowledge:

Resources (such as money, computers, and machines) that a business needs to produce goods and services. People who are innovative and willing to take risks to create and operate new business. Expertise gained through experience or association.

Management: “Management may be defined as a process of coordinating resources to meet organizational goals.� Management also can be defined as planning, organizing, leading and controlling of human and other resources to achieve organizational goals effectively and efficient. Levels of Management 1. Top managers: are those at the highest level of the organization they are responsible for setting goals and they have the most responsibility and power in the organization such as, president, CEO, VP. 2. Middle level managers: Are those in the middle level of the organization. They supervise the employees and implement the goals of the top managers and coordinate with the lower level managers such as, Controller, marketing manager and sales manager. 3. Lower level managers: They are the lowest level of the organization structure. They supervise the employees and implement the plans set at the higher management levels such as Supervisor and foreman. Management Pyramid

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GuLaM.41 Functions of Management Management has four basic functions; these four functions are mainly as follow:

 Planning may be defined as Establishing objective and goals for an organization and determining the best way to accomplish them. There are four Types of plans: 1. Strategic planning (long-term plans) 2. Tactical planning (medium -term plans) 3. Operational planning (short-term plans) 4. Contingency Planning Strategic Planning is the processes that outline the firm’s long rang goals set the course of action the firm will take to reach its goals. Strategic planning is a continuous process and normally involves seven interrelated activities: 1. Develop vision. 2. Write mission statement

3. Perform SWOT analysis 4. Develop Forecasts 5. Analyses Competition

Vision is viable view of the future that grows out and improves on the present. Is a statement of organization’s purpose, goals and philosophy. It used to transform vision into reality. It is a brief document defines why the organization exist, what it want to do SWOT stand for : Strengths, Weaknesses, Opportunities and threats Is the number of assumptions the manager make about the future. 1- Differentiation Strategy 2- Cost Leadership Strategy 3- Focus Strategy

6. Establish goals and objectives 7. Develop action plans Includes Tactical Planning and Operational Planning This type of planning takes place is top management and the time for this planning 5 years or more.

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GuLaM.41 •

Tactical Planning is the process, which specifies the details of how an organization’s overall objectives are to be achieved.

Operational Planning is concerned with setting the work standard and schedules necessary to implement the company’s tactical objectives.

Contingency Planning is the process of preparing alternative courses of action that may be used if the primary plan doesn’t achieve the organization's objectives.

 Organizing structuring working relationships in a way that allows organizational members to work together to achieve organizational goals. Also, it can be defined as process of arranging resources to carry out the organizations plan.  Leading is the process of influencing and motivating people to work effectively and willingly to achieve company goals.  Controlling is evaluating how well an organization is achieving its goals and taking action to maintain or improve performance one of the four principal functions of management.

Marketing Market is a place where people can buy and sell products. Marketing is the process of planning and executing the conception, pricing, promotion and distribution of goods and services that satisfy individual and organizational objectives. Marketing applies to goods and services In respect to customers, marketing involve understanding customers’ needs, their buying behaviour and providing customer service.

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GuLaM.41 Production is the process of transforming resources into goods and services that people need or want. The creation of finished goods and services using the factors of production: land, labour, capital and knowledge. Production Process

 The production process consist of three main parts:  Input: the organization resource such as land, employee, money, machine.  Conversation process is the sequence of events that convert resources (input) into products and services.  Output: the finished product or service. There are two main types of conversation process: Analytic System: production process that breaks incoming materials into various component products and divisional patterns simultaneously. Synthetic System: production process that combine two or more materials or components to create finished products, the reverse of an analytic system The Product Life Cycle

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Fundamentals of Business  

Fundamentals of Business handout you will cover the basic terms which are often used in business

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