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)8except 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:
1. The global business environment: The global business environment is very important
because it surrounds all other environmental influences (economic and legal etc). Two
major environmental changes in the last years have been the increase of free trade
among nations and the growth of international competition.
2. Economic and legal environment: The government can influence the level of risk of
starting a business and can therefore increase entrepreneurship and wealth in a
country. This is done by: keep taxes and regulations to a minimum, allow private
ownership establish a tradable currency, eliminate corruption establish laws that
enable people to create contracts that are enforceable in court
