Exist to satisfy the needs and wants of people, organizations, governments, etc.
Enterprise – a group of people that tackles an objective, usually profit
Quality of output depends on quality of inputs
Main inputs in a business
Capital
Amount of money needed to run a business
Man-made goods like machines, buildings, vehicles, and equipment needed for business to operate
Investment – increasing spending on capital
Land
Space where a business operates
Raw materials and natural resources that are used in making a product
Labor/manpower
Physical & mental efforts of people to produce products/services
Enterprise/entrepreneurship
Management, organization, and planning of other three factors of production
Actions of entrepreneur who shows initiative and takes risks to set up, invest, and run a business
Main business functions and their roles
Human resources
Manages the workforce and laborers of the company
Deals with recruitment, wages, communication, and motivation of employees
Finance and accounts
In charge of managing the organization’s money and assets
Ensures accurate recording and reporting of financial documentation (to comply with legal requirements)
Marketing
Ensure that a company’s products sell
Concerned with identifying and satisfying consumers’ needs/wants
In charge of promotions, advertisements, etc.
Operations
In charge of business functions and processes that produce the actual goods
Concerned with research & development, delivery, stock management, etc.
Business sectors (or economic sectors)
Primary
Involves the harvesting of naturally available resources
e.g. mining, agriculture, livestock, drilling, and logging
Regulated and protected by the government
Fuels (produces inputs for) the other economic sectors
Example countries: Vietnam, Philippines, Canada, Dubai
Example companies: Philex Mining, Del Monte, Dole
Secondary
Involves manufacturing of raw products to finished or component goods
Finished goods – exported or sold to domestic consumers
Component goods – sold to companies in the tertiary sector
Example countries: China, Scotland, Japan, Italy, USA
Example companies: Coca-Cola, Honda, Del Monte
Tertiary
Involved with service and retail
Includes retail sales, transportation, entertainment, restaurants, media, healthcare, banking, etc.
Exploited in developing countries
Philippines is a victim of brain drain: where professionals go abroad to look for jobs making it difficult for companies in the tertiary sector to find the employees they need
Relies on the primary and secondary sector for inputs
Example countries: USA, United Kingdom, Singapore, Hong Kong
Example companies: JP Morgan, Convergys, Lotte
Quaternary
Involves intellectual activities or innovation services
Includes government, education, libraries, scientific research, information technology, etc.
Impact of sectoral change
Change in economic structure (primary to secondary, secondary to tertiary, etc.)
Industrialization
When a country moves towards the manufacturing sector as its principal output and employment (primary to secondary)
Products become more refined and have more export potential
Raises the standard of education
Opens better job opportunities
Developed nation
Exploits the tertiary sector as the national output of employment
Further raises the standard of education
Examples of effects of shifting to the tertiary sector
For a labor intensive manufacturer of aluminum cans
Quality of products improve
More distributors
Less employees and higher wages for employees
Can consider turning to robots and machines, as well as outsourcing
For the owner of a small seaside bed and breakfast
Easier to find competent employees
More income due to higher demand
More competition
People would rather work for bigger companies
Can consider expanding
For a family-owned vegetable farm
More demand due to more stores
Opportunity for a “dampa” system
Less laborers
Can consider opening a small business or outsource
Entrepreneurship (and the entrepreneur) vs. intrapreneurship (and the intrapreneur)
Entrepreneurship is the process of starting a business, company, or organization
The Entrepreneur
The founder, and usually owner
Big risk, big reward
Organizes inputs of production into goods and services (outputs)
Obtains money, buys the inputs needed and makes decisions.
Takes risks and provides the vision for the business idea
Assumes large financial risk
Provides sufficient resources
Intrapreneurship is similar to entrepreneurship but is done in an existing organization
The Intrapreneur
Is an employee of the organization
Uses resources of company to undertake projects and therefore risks very little
Rewarded in the form of a paycheck
Does not act autonomously like an entrepreneur as he is dependent on other employees or the organization he works for
Reasons for starting up a business or an enterprise
Profit – positive difference between revenues and costs
Fame
Benefit human welfare
Very fulfilling
Family
Legacy
Common steps in starting up a business and problems new ones may face
Businesses often start up by looking for market opportunities (market gaps or niches)
Niche markets are where small businesses can easily compete
Factors to consider: What questions would businessmen ask about the factors?
Business idea
4 business inputs (capital, land, labor, and enterprise)
Four departments/functional areas
Possible problems faced by a start-up (either internal or external)
Internal
No land to establish a business
Product may not appeal to your location
Lack of manpower
External
Terrorists
Politics or government
National Calamities
Limited resources
Business plan
Report detailing aims and objectives of a business
Planning tool that serves as a blueprint to address the issues of a startup business
Meant for investors/banks to help them decide on whether to invest/approve loans
Elements of a business plan
Business – name of the business, type of the business, statement of aims and objectives, details of the owner
Product – details of goods/services, operations and equipment needed, suppliers, price
Market – who you’re selling to, market profile, competition (strengths and weaknesses)
