Chapter 1: Business world and business management
The role of business in society
• The business world is a complex system of individuals and business organization. In a market
economy involves activity of transforming products/services in order to meet people’s needs.
Offered to the market in exchange for profit.
• Business involves human activities. Business organizations managed by people - businesses
own property, machines, and money – managed and operated by people.
• Business involves production. Production the transformation of certain resources into products
of certain resources into products/services
• Business involves exchange – produce products/services for exchange for money or for other
products/services.
• Business involves profit – reward for meeting people’s needs and enables businesses to pay
for resources and make a living.
• Some businesses produce predominantly tangible products (something that can be touched)
and some businesses produce predominantly services such as entertainment.
• Business is the means which society endeavours to satisfy the needs and improve its
standards of living and creating wealth.
• Heart of all business ideas are entrepreneurs who start new ventures and create jobs,
economic growth and hopefully prosperity.
• Business world is result of activities related to meeting needs of people in market economy.
• Formal sector – large businesses that are listed on the JSE responsible most of SAs economic
activity. Market economies tend become less dependent on primary economic activities like
mining and agriculture.
• Micro enterprises informal sector- not registered and people live primarily on subsistence or
survival basis.
• Business creates a wealth catalyst for economic growth and is credited with bringing high
standard of living developed countries.
• Corporate social sustainability and voluntary compliance business with practices that are
sustainable. Social responsibility contribution towards employment opportunities and
contribution to the economy. Businesses contribute voluntarily and directly to social causes and
community upliftment by way of corporate social investment.
• Employment equity notion that the composition of the workforce all levels should reflect
composition of community – aims create equal employment opportunities for all and redress
the inequalities of past ensuring workforce composed roughly same proportions.
• Business ethics is ethical behaviour of managers and executives. Managers maintain high
ethical standards often in positions where they can abuse power. Code of business conduct
provide clear guidelines to managers on what is ethical.
• Consumerism social force that protects consumers against unsafe products and malpractice by
exerting moral and economic pressure of businesses. It forces producers of goods/services
take full responsibilities for ensuring products comply with standards.
• Environmental sustainability legislation is forcing businesses to take environment into
considerations.
, • Business world is interconnected with society may be defined as a process uses country’s
means of production to produce products to satisfy needs of people. Primary purpose in free
market system to make profit while satisfying needs of people
Needs and need satisfaction
The multiplicity of human needs
• Continued existence human depends on constant satisfaction of numerous needs physical and
psychological.
• A need may have a physical, psychological or social origin requires satisfaction. Physiological
related to necessities (hunger and thirst). Psychological make life more pleasant not essential
for survival – include need for holiday cellphones etc.
• Maslow human needs range from most essential for survival to least necessary.
• Physiological needs satisfied for survival, psychological needs with which the higher levels of
the hierarchy mainly concerned.
• Collective needs such as protection or education
Societies limited resources:
It is clear in highly developed societies that there are only limited resources available to satisfy all their
needs.
• Water is key resource to individuals and businesses but is scarce is a massive problem facing.
• Resources are basic inputs in the production of products and services known as production
factors.
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