The document provides an overview of business organization and the business environment. It defines a business as an organization that uses resources to meet customer needs by providing products or services. It outlines the key functions of businesses as identifying customer needs, purchasing resources for production, and producing outputs like goods and services. The document then discusses the four main business functions of human resources, finance/accounting, operations/production, and marketing. It explains how each function contributes to the business. Finally, it covers the common elements included in a business plan like the business idea, organization, HR, finance, marketing, and operations.

1. Business Organization and
Environment(Unit one)
1.1 An Introduction to business
management
Dr. Fereshteh Mohammadian

2. WHAT IS A BUSINESS?
A business is any organization that uses
resources to meet the needs of customers
by providing a product or service that
they demand.

3. The role of business
• A business aims to meet the needs and wants
of individuals or organizations by these
actives:
• Producing crops or extracting raw materials
form the earth
• Creating products
• Providing a service.

4. WHAT DO BUSINESSES DO?
Businesses identify the needs of consumers or
other firms. They then purchase resources, which
are the inputs of the business or factors of
production, in order to produce output. The
'outputs' of a business are the goods and services
that satisfy consumers' needs, usually with the
aim of making a profit.

5. Business activity
Human
Physical
Financial
Enterprise
Production
Goods
Services
Resource inputs Process to add value Product outputs

6. Resource inputs
Human
Physical
Financial
Enterprise
The right quality and quantity of people required to
make the product or service.
The right quality and quantity of materials,
machinery, and land space required to make the
product or service.
The right quality and quantity of cash and other forms
of money required to make the product or service.
The business idea and the will to see the other elements
become a functioning and, ideally. (entrepreneurship)

7. Production Process and product outputs
Human
Physical
Financial
Enterprise
Production
Goods
Services
The tangible products from primary sector(agriculture), or
secondary sector(manufactures).
Intangible sector
Capital intensive= large proportion of
land or machinery inputs
Labour intensive= large proportion of
labour inputs

8. Business functions
All businesses, from small start-ups to huge conglomerates, are organized by 4 key
functions.
Business
Organization
HR
Finance and
accounts
operations
Marketing
Business
Organization
HR
Finance
and
accounts
operations
Marketing
A small business
A large business
SME= Small & Medium sized enterprises.
( # of employee, turn over or balance sheet

9. Function Role of business departments
HR
• ensuring about appropriate employed people to make the
product or service
• recruiting & training them, at times dismissing them, and
determining of appropriate compensation.
Finance and
accounts
• ensuring of availability of appropriate funds
• Forecasting requirements, keeping accurate records,
procuring financial resources from various providers,
and ensuring about proper payment for goods and
services acquired to operate the business
Marketing
• ensuring about business offered desired by a sufficient
number of people or businesses for profitable operations
• Appropriate strategies to promote, price, package and
distribute a product or service.
Operation
managements
or production
• ensuring of appropriate processes to make product or
services with desired quality
• Control of the quality and flow of stock, look for ways to
produce the good or service more efficiently.

10. Change of
customer
taste
Redesign
the
processes
Financial resources
required for redesign
Influence on number
and type of working
people
found by marketing dep.
by operation management or
production dep.
by financial dep.
by HR functions.

11. Changing of priority in business
• New business needs to survive (All four deps).
• Plan to diversity (products or goods) after
business establishment (All four deps).
• Growth and market control for a successful
business…significant modifications to the
different business deps.

12. Sectors of business activity
Goods
Primary
All raw materials are acquired in the
primary sector (extraction, mining, farming,
fishing, hunting and trapping)
Secondary
Raw materials are processed to goods by
manufacturing. (to durable, non-durable and
capital goods)
services
Tertiary
Includes all services such as financial,
leisure, healthcare, education, transport,
security,…) and some important especial
services such as banking, insurance,
transportation, retail/ wholesale and
consultancy.
Quaternary
Subgroup of tertiary focused on knowledge
such as speaking, e-services, IT, the media
and web-based services.

13. •Shipping to automobile
dealerships
•Sell to consumers
•After sale service
•Providing online records
about automobile features
and services
• Providing information
about cars features by
for-profit companies
that sell information.
• Processed raw
materials into the other
materials which used
by manufacturers into
automobile parts.
• Assembling of
automobile parts to
make automobile.
• Providing raw
materials(metals,
rubber, materials to
make plastic and glass)
• Extracted raw materials
Primary
sector
Secondary
sector
Tertiary
sector
Quaternary
sectors
A sample of product chain

14. Horizontal and vertical integrations
Integration
Backwards
vertical
Horizontal
Forwards
vertical
Horizontal
• Increase market share
• Increase market power
• take advantage of economies of scale.
• Lowering transaction
costs(elimination of transaction cost
between businesses)
• Ensuring reliable supply(treating of
“downstream” stage as a preferred
customer in terms of quantity,
availability and price by “upstream”
stage.
• Avoiding government regulation(such
as price controls, taxes)
• Increasing market power(by using
various pricing strategies)
• Eliminating or weakening the market
power of other businesses

15. Entrepreneurship and intrapreneurship
• Entrepreneur : an individual (a self-employed or central part
to the start-up of a business) who demonstrates enterprise
and initiative in order to make a profit.
• Intrapreneur: an individual employed by a large
organization who demonstrates entrepreneurial thinking in
the development of new products or services.
• Innovation is central to what both group do in three forms:
– Market reading: observe customers and competitors to make
small changes to existing products
– Need seeking: communicate with potential customers to
determine their needs
– Technology driving: invest in R&D and follow technological
capabilities

16. Reasons to start up a business
Rewards
No receiving of all or same rewards of people who
work for the business owners(who put their capital
at risk).
Independence
Setting the policies and procedures by individual
with an entrepreneurial spirit with working for
themselves
Necessity
Income necessity for some ones with redundant
positions or unsuccessful to find work.
Challenge
Trying to perform all functions by some people who
want to see whether they can “make it” by
themselves.
Interest Working an area for some ones who have a passion.
Finding a gap
Finding untapped opportunity in order to achieve
“first mover advantage”.
Sharing an
idea
Spreading or selling of some ones idea to others.

17. The process of starting up a business
Two features are common to start- up any successful
business:
• the business idea(fundamental activity which can drive
by market, product or service)
• planning(to reduce many risks associated with starting-
up a business)
1
Organizing
the basics
2
Researching
the market
3
Planning
the business
4
Establishing
legal requirements
5
Raising
the finance
6
Testing
the market
Steps for start-ups

18. 1- Organizing the basics
Basic questions of entrepreneurs:
• base & name of business
• legal & operational structure
• business infrastructure to make the business
feasible suppliers, potential customers, and
government services

19. 2-Researching the market
• Market research is needed to determine the precise
market segment it will target. These questions are
important to answer by entrepreneur:
• How will the market research conduct?
• Who will be the target market?
• Can the new business test its concept?
• What will be its “ unique selling proposition (USP)”?
The market research will refine and narrow the basic
business idea to a significantly more precise idea.

20. 3-Planning the business
After narrowing the business concept, the
entrepreneur will write a business plan for any
needed issue before beginning of operations;
especially for stakeholders, potential owners of the
business and financial institutes to provide capital.
• How the business will operate by specific
elements?
Business plan will provide some confidence to
investors and financiers by indicating foreseen
potential issues and trying to address them.

21. 4-Establishing legal requirements
Legal requirements for an organization:
• labour & operational practices,
• tax obligations (income taxes and various sort of
payroll tax (employee pension, sickness benefits
and medical insurance)),
• business registration according to the host country
laws,
• specific licenses
• required inspections before operation

22. 5-Raising the finance
Providing the capital from the investors (selling
share) or lenders (loans) by making them
confidence about accounting and auditing
procedures.

23. 6-Testing the market
• The purpose of testing the market is to verify
that the business idea will be enough to receive
by consumers to suggest that the business has
a reasonable chance of success.

24. Problems a new business may face
Organization
• The location of the business is inappropriate.
• The name does not register.
• The structure does not work.
• Supplies are unreliable.
Market research
• The research was poor.
• The target market wasn’t appropriate.
• The test was too optimistic.
• Channels of communication were weak.
Business plan
• The business plan did not convince.
• Goals were too vague or contradictory.
Legal requirement
• Labour laws were not addressed.
• Registration was too difficult.
• Tax obligations were not addressed.
Finance
• The accounts were not kept properly- cash flow, in particular,
was a problem.
• Raising start-up capital was too difficult.
• Raising medium –tem to long-term finance was difficult.
The market
• The launch failed.
• The pilot was inconclusive.
• Success was limited- the product failed to inspire.

25. The purpose of a business plan
A business plan is drawn up to:
• Support the launch of a new organization or
business idea
• Attract new funds from banks, grant providers, or
venture capitalists
• Support strategic planning
• Identify resource needs
• Provide a focus for development
• Work as a measure of business success.

26. Element The element
focus
Key questions (of business plan) to address are:
Starting the
business-
the idea
Setting out
the business
idea in the
right context
What is the core idea and what are the objectives of the business?
How will the product work? Does it have a unique selling
point(USP)? How will the product be developed? Why should it
succeed?
Business
organization
How the
business will
be organized
Where will the business be located? What structure will it have?
What type of business will it be? Who will make what decisions?
How will the owner or owners share out the profits? Are there any
legal requirements necessary to start up the business?
HR
How he
business will
be staffed
Who will have what responsibilities and what rewards should they
expect? What will be the HR plan? What type of contract will be
used?
Finance
How the
business will
be financed
Where and how will the entrepreneur source the start-up capital
and at what cost? This unit should include projected budgets,
income statements, and cash-flow forecasts.
Marketing
How best to
market the
product
What market research has been done? Has a sales forecast been
made? Is the product to be targeted at a particular segment of the
market or will it be mass marketed? What will the promotional
mix be? How will the product be distributed?
operations
How he
product will
be made
How will production be organized? How many units will the
business produce? How long will production take? Is there likely
to be lead time? What is the supply chain likely to be?