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Summary of Introduction to buisness management by Barney Erasmus
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Varsity College BCOM Year 1 Business Management 1A LU 1
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BusMan 1: unit specific outcomesUnit 1 (chapter 1):
1. Clearly explain the role organisations play to satisfy societal
needs.
A business organisation is an entity that provides goods and services to customers in pursuit of
profit. Business organisations transform resources into products and services that satisfy
society’s needs.
2. Explain how Maslow’s hierarchy of needs can be used to
understand societal needs
The theory is that people will try satisfying the lower, more basic needs before satisfying the
higher-level needs. Maslow’s hierarchy of needs can be used to understand societal needs, and
which are essential (need to survive) and those that are higher up in the hierarchy- this is where
people have satisfied what they need to survive and now want better and newer products.
3. Applying Maslow's hierarchy of needs to the workplace
Maslow’s hierarchy of needs can be used in the workplace to satisfy the needs and wants of
employees to create a better working environment for them where they are more productive
and have all the resources and support, they need from the company.
4. Correctly explain the economic principle.
The economic principle refers to the best possible way a business can use resources to create
maximum profit. It is the idea that people try to get the greatest possible benefit with the
available resources and how to achieve the highest possible satisfaction of needs with scarce
resources.
5. Correctly identify various types of need satisfying
institutions.
Business organisations: satisfy needs of the community and mobilise a country’s resources to
satisfy its needs at the risk of loss and pursuit of profit. They are the main need satisfying
institutions. A private organisation
Government organisations: protects and creates collections of non-profit-seeking facilities and
services (healthcare, justice, education)
Non-profit-seeking organisations: offer services and products (to lesser extent) that private
enterprises and government organisations do not (sport, culture, welfare organisations) and
provide services without seeking profit.
6. Accurately identify the four factors of production.
Natural resources: their supply cannot be increased and are scarce, human effort is required to
process these resources into need-satisfying products
Human resources: physical and mental talents and skills of those employed to create products
and services and are paid for their labour
Capital: all assets and goods that make further production of consumer products possible
(machinery, equipment)
Entrepreneurship: the collective capacity of those who are willing to accept the risks involved in
providing goods and services to their societies. A scarce resource.
, 7. Correctly demonstrate how businesses use the factors of
production to achieve goals.
Businesses use the factors of production to maximise shareholder wealth and profit. These 4
factors are essential in providing products and services which aim to satisfy consumer needs
which requires a combination of all 4 factors. Without quality production factors the aim of
creating maximum profit is compromised.
8. Clearly explain the differences between the main economic
systems.
Market economy socialism Command economy
Private ownership of FOPs and Basic industries owned by state State owns and controls all
freedom of choice and freedom of choice industries & agriculture
Free competition in markets Limited competition in markets No competition in markets
due to state industries
Driven by profit and rewards Profit motive recognised Profit not allowed & workers
urged to work for glory of the
state
Managers free to make Decisions restricted to State creates management
decisions, people choose own government policy in state environment, no freedom of
careers owned orgs. decision, managers are party
members
Workers free to choose jobs & Workers free to choose jobs & Limited job choices, unions
employer, can choose to join employer, limited right to strike controlled by state
unions & strike in state orgs.
Consumers have freedom of Consumers have freedom of Consumers have very limited
choice in free markets, spending choice, products of state orgs. choice, product prices and
limited to income only Prices and qualities must be income levels set by state,
accepted products are rationed
9. Describe correctly the role of the economic system in the
need-satisfaction cycle.
The community determines the economic system in which the necessary need-satisfying
institutions are created that are responsible for the production and distribution of products and
services. Communities have tried different economic systems to see which approach best
satisfies their wants and needs
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