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summary chapter 01 of introduction to business administation
Typology: Assignments
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Prepared by TA Trinh Ngoc Nhan A business provides goods and/or services with the main goal of making profit. Profit is the difference between revenue and expenses. The person who risks time and money to manage and start a business is named an entrepreneur. Entrepreneurs might risk losing time and money on a business. The reward of taking risk is profit. On the contrary, if the company has done not so well, this occurs in a loss (expenses>revenues). Secondly, there is another type of organization, called a non-profit organization. It´s goal is not making a personal profit for its owners or organizers. Besides the entrepreneur, the stakeholders have a great interest in the development and profit of the company as well. Stakeholders are for example; customers, employees, stockholders and bankers. The challenge is to balance the needs of the stakeholders as best as possible. A decision of management can be ‘outsourcing’. This means that several functions are assigned outside organizations. This can be an example for conflict between stakeholders and management in a company (employment versus maximum profit). The quality of life is the general well-being of a society in terms of education, health care, safety and political freedom. The standard of living is the amount of goods and services people can buy with the money they own. These are important factors which can create satisfaction/joy and determine the level of quality in your life. Running a business can increase the standard of living as well as the quality of life. First of all, businesses can increase the level of wealth/quality in life because they provide employment for people. Secondly, tax is being paid by employees as well as by businesses. The government uses this money to build hospitals and for example schools. The wealth that businesses generate and the taxes that they pay, may help everyone in their communities. Which can lead to an increased quality of life. Several factors of production are considered as the “building stones” of a company: ● Land: Natural resources ● Labour: Workers ● Capital: Everything that is used for production (i.e. tools, machines) except for money ● Entrepreneurship: People who are willing to take risk and invest time/money in a business ● Knowledge: Determining wants and needs and to respond to them efficiently The business environment consists of surrounding factors that either develop or hinder business:
Prepared by TA Trinh Ngoc Nhan