Business 1IB

Business 1IB
Business —> Organization that transforms an idea into product or services
delivered to consumers

In nite need and limited resources —> Allocate resources (Businesses are
the ones in charge of allocating those those resources)

Labor intensive: - Human capital

Capital intensive: - Financial
- Physical Capital
- Enterprise —> Idea
- Land (Finca etc…)

⁃ Inputs: Production factors

⁃ Output: Goods or service
- Goods: Tangible
- Services: Intangible

Business Functions:

1. Operations/Production
2. Human Resources —> Getting the right amount of workers, take care of
them, and if necessary re them.
3. Finance and accounts —> A) Getting the right amount of nances in order
to perform their economic activity
B) Making use of the investment properly
4. Marketing —> Sell the product

Small businesses: Owner performs all functions

Large businesses: Functions are divided in departments

Econ sectors: - Primary —> Extraction of raw materials

- Secondary —> Industrial prod of intermediate and nished goods
- Tertiary —> Delivery of services
- Quaternary —> Delivery of information, knowledge, IT

Example: consultancy, technology, research and development

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 Startups: New business

Reasons why would someone start a business

⁃ Solution to a problem
⁃ Work to build yourself up
⁃ Win money
⁃ Share an idea
⁃ Fill a gap in the market
⁃ Challenge
⁃ Help society

Process of starting up a business:

1. Have in mind a business idea

2. Organise the basics —> Location of the business
—> How will the business operate
—> When will it be started
—> What do you you want to sell? (Goods or Serv.)
3. Market research (can be put in whichever step, but it makes more sense
to have a business idea rst)
4. Planning
5. Take care of legal requirements (patent idea etc…)
6. Raise nances for this said so business

Challenges:

Idea —> I don’t have a business idea / Don’t think the business is good
enough

Organise —> The business is not in a suitable location / Not enough

knowledge to develop the bsnss / Not enough resources

Mkt research —> Strong competitors / There’s no market / Little to no

information about the market / The cost is too high

Planning —> No supply for the labor you need / The business is shit and
ops /

Legal requirements —> Legal requirements are expensive / The idea is

already patented / Tax obligation / Mist comply with local legislation

Finance —> Too risky / No investors / Finances are mismanaged / The idea
requires to much money
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 Test the market —> The product ops

1.2 Types of business entities

Di erence between public ( rules by the government ) and private ( ruled

by an indv or private companies )

Di erence between for - pro t ( main goal —> make pro ts ) and non
pro t ( don’t pursue pro ts at all —> main goal ≠ make pro ts )

Revenue - Costs = Pro ts

—> Price x Quantities sales
—> Invest in the business ( keep the money )
—> Give DIVIDENDS ( Money that the company keeps to divide between
them )

Main types of for - pro t organisation :

⁃ Sole traders —> A business owned and ran by one person. No legal
distinction between the owner and the company
⁃ Partnership —> A business owned and managed by two or more
people. No legal distinction between the business and the owner
⁃ Privately held companies —> The business becomes a company,
when the owner(s) register as any legal type of company ( Limited
Company [LC], Incorporated [INC] )
⁃ Publicly held companies —>

Entreprises —>For pro t —> Social For P entreprises

—> Non social For P entreprises
—> Non Pro t —> Social entreprises

Social Enterprises —> Businesses that pursue social purposes. That include
some objectives aimed at helping the society or the environment.
—> Non pro t
—> For pro t

For pro t social enterprises :

Main factores;

⁃ Pro ts are important, but not at any social/environmental cost

⁃ The business cooperates with the local community for a better
sustainability
⁃ They operate very similarly to non pro t enterprises, but they adopt
some social objectives
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 Non-Pro t social enterprises:

Surplus = Revenues - Costs

Non pro t enterprises don’t share money with the owners of the business. If
they have higher revenues than costs (Surplus), these are kept in the
company.

Pro ts —> Invest in the company

—> Dividends (owners)

NGO —> Non Governamental Organization

Charities —> Speci c form of NGO aimed at providing refer to those in need

Common Features —> There are no pro ts. There may be a surplus
—> Donations are one of the main sources of nance
—> Usually there is unclear ownership and control

Smart objectives :

Speci c ——> Strategy: Business strategy —> A plan to achieve a strategic

objective (Long - term)

Measurable

Achievable

Relevant

Time —> Tactic: Business tactics —> A plan to achieve tactical objective
(Short - term)
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 Need for change in business objectives :

Vision —> Shouldn’t be changed

Mission —> Should be adapted to Internal and External factors

Internal Political Environment Technology Ethics Social Econ Legal

changes

External Leadership HR Productivity

09/10/24: Faltan mas clases antes que esta pide apuntes.

Strength Weakness Oportunities Threats

High-Quality Limited Seating Expanding Increased
Co ee and Capacity: Delivery Competition:
Unique Recipes: The shop has a Services: New co ee
The co ee shop small seating With the rising shops or cafes
uses high-grade, area, which limits demand for food opening nearby
sustainably the number of and beverage can take away
sourced co ee customers it can delivery, the potential
beans, which serve, especially co ee shop can customers,
di erentiates it during busy partner with threatening the
from competitors hours. delivery business's
and creates a platforms to market share.
loyal customer reach more
base. customers who
Strength : Growth strategies —> Anso matrix : Business tool that helps
setting growth objectives and strategies

Market penetration : Occurs when a business grows by increasing its

market share

Key factors of success: Growth potential of the market

—> Strength of customer loyalty
—> Power / ability of competitors
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 21/10/24

1.5 Growth ( Increase the production level )and Evolution ( Development )

:

The impact of the external environment on a business

Business —> Econ, Ecology, Culture, Ethics, Social, Legal, Political,

Technology, Environment

STEEPLE analysis: Business technique used to analyse the environment of

business.
⁃ Social-cultural
⁃ Technological
⁃ Economic
⁃ Ethical
⁃ Political
⁃ Legal
⁃ Ecological (Environmental)

22/10/24

Economies and diseconomies of scale:

Economies of scale happen when average (cost per unit) of production

decrease by increasing production)

TC = FC + VC
(Total Costs) = (Fired Costs: they don’t depend on the quantity produced)
+ (Variable Cost: depend on the quantity produced)

—> Ex: salaries, rent etc…

—> Ex: raw materials, supplies, electricity/energy etc..

AC = TC = FC + VC
Q Q
A rm is going to experience economies of scale when producing greater
quantities which decline their AC
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 28/10/24

Grow —> Produce more Market share = Sales of business

Pro t = Revenues - Cost Total market sales —> Q sold x Price
Reasons for growth

⁃ To increase the market share

⁃ To increase awareness, loyalty, status …
⁃ Expect increase in revenues
⁃ To become the market leader
⁃ To attract investors
⁃ To take advantage from economies of scale

29/10/24

Decision tree:

1 2 3 4

Probabilities ——> Succeed (0.4) /60 - 15 = 45 Succeed (0.7) /30 -25 = 5 Succeed (0.6) /40 - 20 = 20
Fail (0.6) /20 - 15 = 5 Fail (0.3) /10 - 25 =15 Fail (0.4) /30 - 20 = 10

2 15 —> Costs

3 25

4 20

05/11/24

Laundry Shop:

External —> Loans, investors, merge and acquisition (M&A), joint venture
(create a new business for a speci c goal and time), strategic alliances,
franchise

Internal —> Retained pro ts ;

1. Organic growth (use the retained pro ts to invest in your business)

2. Adv (Low risk invest., you don’t need to merge)
3. Disadvantage (slow growth, no retained pro ts = no growth)
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