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1. Introduction to Business & Its
Structure
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LEARNING OUTCOMES
At the end of the session you will be able to describe:
 What is business and the important elements in business.
 Main business functions and the different types of business with both
advantages and disadvantages.
 Importance of a growth of a business and how to measure the growth by
specifying the growth indicators.
 Who are entrepreneurs and stakeholders.
 Importance of Social Responsibility and how organizations manage their
social responsibility.
 What is Organizational Structure and the importance of different
organizational structures.

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UNIT OUTLINE
 What is Business ?
 Business Functions
 Types of Business
 Growth of a Business
 Entrepreneurs
 Stakeholders
 Social Responsibility
 Organizational Structure

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What is Business ?
Business as a system is a combination of business commerce, occupations, and
resources to produces and distributes the goods and services for profit while
creating value for people in a society
Commerce
Occupations
Resources
=

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Requirements to start a business
Finance /Money Labor / People Customers Suppliers
Premises &
equipment Management &
Organizational Structure
Product or
Service

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Business Aim & Objective
Business objectives are the goals of business – what the business wants to achieve.
All businesses have their own objectives .
Examples for Common types of business objectives:
• Survival,
• Profit Maximization,
• Growth,
• Sales Revenue Maximization,
• Image and Social responsibility.

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External Factors Affecting Business

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Business Functions
Marketing
Production
HRM
Finance
IT
R & D

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Types Of Business
SOLE TRADER
Is a person that owns & runs their own
business
• one person provides all the money(capital)
• one person makes all the decisions
• one person keeps all the profit
Characteristics
• Easy to set up (no legal documents)
• Keep all the profits
• Make all the decisions
• Personal contact with customers
Advantages

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Types Of Business
PARTNERSHIP
Two (2) to Twenty (20) people collaborating
together to run the business as partners
• Capital provides by partners
• Collaborative decision making
• Partnership Agreement
Characteristics
• Share Profits , losses and risk
• Making shared decisions
• Less legal procedure
Advantages

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Types Of Business – cont. …
Private Limited Company
A business that is owned by 2 to 50 people
• 2 to 50 owners called shareholders.
• Shares (part ownership) cannot be bought
by the general public.
• Shareholder’s receive a vote for every share
they own
• Must have Ltd. After it’s name.
• Shareholders receive a share of the profits
called a dividend.
Characteristics

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• Limited liability - If the business fails you
can only lose the money that you invested
in the company. Your own personal wealth
cannot be touched.
• Business continues even when an owner
dies.
• Easier to raise finance as you have up to 50
shareholders.
Advantages
Types Of Business – cont. …
• Legal Documents are needed
to set up a co.
• More costly to set up.
• Decision making and profits
are shared
Disadvantages

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Types Of Business – cont. …
FRANCHISING
Franchising is a form of business organization in which
a firm that already has a successful product or service
(franchisor) licenses its trademark and method of
doing business to another business or individual
(franchisee) in exchange for a franchise fee and an
ongoing royalty payment.

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Types Of Business – cont. …
• Good work ethic.
• Ability to follow instructions.
• Ability to operate with minimal supervision.
• Team oriented.
• Experience in the industry in which the
franchise competes.
• Adequate financial resources and good
credit history.
• Ability to make suggestions without
becoming upset if the
• suggestions are not adopted.
• Represents the franchisor in a positive
manner.
Why
Franchise?

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Growth of a Business
Size of business measures in :
• Sales turnover
• Number of employees
• Share capital
• Market share
• Number of outlets
Reasons for growth
Survival

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Stakeholders
Any person, group or organization who can be positively or negatively
impacted by, or cause an impact on, the actions or activities proposed
• Shareholders
• Management and staff
• Customers
• Suppliers
• Banks & financial organizations
• Government
• Trade unions
• Pressure groups

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Social Responsibility
Social Responsibility definition:
Management philosophy that highlights the social and economic effects
of managerial decisions.
Or
The management’s acceptance of the obligation to consider profit,
consumer satisfaction, and societal well-being of equal value in
evaluating the firm’s performance.

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Organizational Structure
A chart that shows the structure of the
organization including the title of each
manager’s position and, by means of
connecting lines, who is accountable to
whom and who has authority for each area

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Organizational Structure
Work specialization
A component of organization structure that
involves having each discrete step of a job
done by a different individual rather than
having one individual do the whole job
Principles/ Structure variables
• Chain of command
• Span of control
• Authority
• Power
• Responsibility

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Organizational Structure
Tall vs. Flat Organizations
• Tall organizations: more management layers and more hierarchical controls.
• Flat organizations: fewer management layer and decision making closer to the
customer.

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Activity & Questions

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Recommended Readings
• Management : An Introduction by Boddy, D – 4th Edition {ISBN : 9780273711063}
• Management Theory & Practice by Cole, G.A – 6th Edition { ISBN: 9781844800889}