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Summary Varsity College BCOM Year 1 Business Management 1A LU 1
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Varsity College BCOM Year 1 Business Management 1A LU 1
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BMNG – Business LU 1LU 1 – The Business World and Business
Management
The business world is a complex system that involves transforming resources into products and services that meet the needs of
people in exchange for a profit. Description emphasises 4 different elements:
1. Human activities – managed/operated by people.
2. Production – transformation of certain resources into products and resources.
3. Exchange
4. Profit
Profit of a business - dependent on ability to efficiently deliver goods and services that the society needs.
When management fails, it can lead to bad consequences.
Businesses also have to please stakeholders to strive for sustainability and the best interests of the society the serve.
1.2 The Role Of Business In Society
How entrepreneurs transform a nation’s resources:
Resources -> transformation -> product
Positive relationship between development of country and entrepreneurship!
Important characteristic of the business world in developed countries is the freedom of being able to est any business and to
produce, in limits, any product or service the market requires. This system is called a market economy/market system.
Market economy:
- Consists of large and small organisations that collectively mobilise the resources of a country to satisfy the needs of the
needs of the people. - These businesses group together to form industries.
- Formal vs informal sector.
- Variety of needs that a country has determines the complexity of its business environment. 1 st world countries
businesses are the primary source of products, service and employment.
- Businesses create wealth, catalyst for economic growth and brings higher standard of living.
- Business also serves the community indirectly by means of technological innovation, research and development, and
improvements to infrastructure. Business and society both depend on and influence each other. This is the core of
sustainability, ability for the business to survive and prosper.
- Create social responsibility. Create jobs ect
- Business person vs entrepreneur
o Entrepreneur = creates new ideas, products and technologies. Looking for new business opportunities.
o Business person = entrepreneur that doesn’t seek opportunities anymore.
- Anti-competitive behaviour-Competition commission/ Consumer protection Act (No. 68 of 2008) - prohibit unfair
business practises and promote a consistent legislative and enforcement to protect customers.
- The business world is under pressure to behave in ways that are sustainable, themes related to sustainability include:
o The social responsibility –Businesses contribute voluntarily and directly to social causes and community
upliftment by way of corporate social investment.
1
, BMNG – Business LU 1
o Employment equity – composition of the workforce at all levels should reflect the composition of the
community. Aims to create equal opportunities.
o Business ethics – ethical behaviour of the managers and people in business.
o Consumerism – protects consumers against unsafe products and malpractice.
o Environmental sustainability – don’t damage the world
1.3 Needs and need satisfaction
1.3.1. The multiplicity of human needs
Continued existence of humans depends upon the constant satisfaction
of needs. Number of identifiable needs is infinite. Needs may have a
physical, psychological or social origin. Maslow’s hierarchy of needs. As
one need is satisfied, another comes into existence.
1.3.2. Society’s limited resources
Limited resources available to satisfy needs. The resources of any community are scarce and can easily be exceeded by its needs.
Resources are the basic inputs in the production of products and services (Production factors).
Unlimited needs Limited resources
1. Physiological needs SATISFACTION • Natural resources
2. Safety needs OF THE NEEDS
• Human resources
3. Social needs OF SOCIETY
• Capital
4. Esteem needs
• Entrepreneurship/
5. Self actualisation
incuding management
1.3.2.1. Natural resources
- Supply of natural resources cannot be increased.
- Human effort is needed to process natural resources into need satisfying products.
- In the process, natural resources are depleted and may become scarcer.
1.3.2.2. Human resources aka production factor of labour
- Physical and mental talents and skills of people employed to create products and services.
- The size of the labour force of any country is determined by:
o Size of population
o Level of education
o Proportion of women in the labour force
o Retirement age
- For the manufacturing process of a country to be of any value, the country’s labour force has to be trained for certain
periods and to certain levels of skill to be able to produce products and services required.
1.3.2.3. Capital
Capital includes buildings, computers and other products, produced for making possible the further production of the final
consumer product. Capital products usually have a long working life but comes at a high price.
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