Introduction to Business

A Primer On Basic Business Operations

Patrice Flynn

• Publisher: Business Expert Press
• Year: 2019
• Print ISBN: 9781949991482
• eBook ISBN: 9781949991499
• Topic: Business
• Subtopic: Management
• Index: Business

Do we need yet another textbook on business fundamentals when every publishing house has stacks of such books ready for sale? No, we do not need another standard textbook. What we need is a new kind of teaching tool that at once accommodates the modern-day classroom and exposes new century students to the contemporary world of global capitalism in which today's businesses operate.

In primer form, Dr. Patrice Flynn clarifies the functional areas of business, a term used to describe what every businessperson needs to understand to be successful, from entrepreneurship to small business development, legal structure, going global, finance, big data, marketing, management, and more.

This primer demonstrates how a master teacher teaches new century students, thus giving supremacy to pedagogy along with rigorous content. The primer can be used with both business students and the growing number of nonbusiness students interested in learning how business works before entering the world of work. Every student will come away not only with a sense of the business areas that pique their interest but also with a deeper understanding of business from which to craft next career steps.

CHAPTER 1

The Functional Areas of Business

A valuable starting point for anyone interested in learning about business is the examination of the functional areas of business, a term used by businesspeople and economists to describe the key domains that all businesses must focus on to be successful. Some of the functional areas of business include entrepreneurship, small business development, finance, going global, human resources, logistics, big data, marketing, and management.

Ultimately, if you are going to work in business, you must decide which functional area of business most closely matches your interests, skills, and knowledge. How do you know what aspects of business suit you best? What college business courses should you take to pursue your interests? Students tell me their usual approach is to look at the college course catalogue and make selections based on a course title or a descriptive sentence. Given the exorbitant cost of college today, this is an expensive and sometimes futile method of course selection, much less career exploration. This primer provides a solution to such a guessing game.

The information in this primer serves as a guide for college students who are contemplating going into the field of business and are not sure what courses to take. With the aid of this primer, students will be grounded in the functional areas of business. Students will come away with a sense of one or two functional areas that pique their interest and could be pursued in subsequent semesters.

Every student will complete this course of study with a deeper understanding of business from which to craft next career steps.

Every student will complete this course of study with a deeper understanding of business from which to craft next career steps.

In addition, students recognize that we all live and work in a global capitalist economy and might therefore benefit from studying the essence of business thinking and operations. Knowing the fundamentals of business helps us make more informed decisions in our daily capacities as (a) consumers of business products and services, (b) recipients of business micro-targeting and other forms of merchandising, (c) users of financial instruments, and (d) workers who report to a boss. Thus, I welcome business and nonbusiness students to use this primer to help navigate today’s global economy, a subject that captures my imagination each day.

To begin, we start by giving meaning to the terms “business” and “functional areas of business.”

What Is a Business?

We hear and use the term “business” often in daily conversation. We tell friends of our interest in studying business. We stream the nightly business news. We read the business section of newspapers and magazines. We follow business online news feeds. We hear about new business opportunities for summer jobs and paid internships. Business executives are regularly interviewed on mass media by journalists.

What Is a Business?

An organization

comprised of people

who produce goods and services

to sell

to earn a profit

distributed to stakeholders.

What is a business? Simply put, a business is an organization comprised of people who produce goods and services to sell to customers with the expectation of earning a profit to be distributed to stakeholders.

The business organization is our unit of analysis. An organization:

• •Can be large or small;
• •Can have any number of employees, from one to thousands;
• •Can operate a single store or 10,000 stores;
• •Can produce goods and services in any of the industries tracked by the U.S. Department of Labor; and
• •Can employ workers from the hundreds of different occupations represented in the modern workforce.

The various types of business organizational structures in the United States provide the legal framework for commercial activities, as explored in Chapter 3.

A business is an organization comprised of people who are employed to help the entity achieve its goals. These people come from all different occupational and industrial backgrounds. Their levels of education vary from job to job as do the roles and functions performed for the business. Some people are employed as wage and salary workers, others as contractors, sole proprietors, or self-employed persons. As will be stressed in Chapter 12 on management, people make the business. If you are a people-person, you probably will do well in business. You may even choose to study human resource management or international management, which are specializations in business management.

What are the people who work in a business organization doing all day? They produce products or provide services that are unique to their business enterprise. Economists identify two types of products. The first is called “goods,” which represent tangible items produced for sale to customers (e.g., robots, computer sensors, mobile devices, shoes). The second is called “services,” which represent other products offered to customers (e.g., plumbing, roofing repairs, physical therapy, language translation, computer-brain interface surgery). As presented in Chapter 6, entrepreneurship is central to taking an idea and making it a reality.

The products produced by a business are intended to be sold to existing or potential customers. This is where workers skilled in sales, advertising, and merchandising come into the picture. As we all know, the job of a salesperson in the 2020s contrasts starkly with a sales job in the twentieth century due to the advent of electronic sales on networked digital platforms, known as e-commerce. If becoming a salesperson is of interest to you, take a careful look at Chapters 10 and 11 on big data and marketing to get a jump on this functional area of business.

The process of hiring people to produce products and services to be sold to customers is intended to earn the owners of the business a profit, defined as total revenues minus total costs. By definition, private for-profit businesses are in the business of making money, which is what differentiates business from the two other sectors of the U.S. economy: (a) the public sector and (b) the private nonprofit sector. If profit is your goal, the private for-profit business sector is where you belong. For-profit firms strive to find appropriate ways to grow their businesses and hence increase profits, as considered in Chapters 4 and 5. Financial mechanisms to secure adequate financing for such growth are explored in Chapters 7, 8, and 9.

Lastly, who gets to keep the profits earned by a business? By law, the profits are distributed to the stakeholders on record. As discussed in Chapter 3 on business structure, businesses that are set up as sole proprietors distribute profits to the single owner of the business. Those set up as partnerships distribute profits to the general or limited partners per the partnership agreement. Businesses set up as corporations have a fiduciary responsibility to distribute profits to all owners, including shareholders.

Examples of the Functional Areas of Business

Now that we have a clear definition of a business, let’s look at some of the key functional areas of business. In this primer, the functional areas presented do not include all functional areas, but rather those my students and I have identified as the most valuable in the initial stages of considering a career in business. The functions presented will help you understand what is required to start and run a successful business.

Entrepreneurship and Small Business Development

Entrepreneurship is where business begins and may lead to the establishment of a new legal business entity. Small business development stems from an initial idea and develops into the design of a business plan, consultation with attorneys, registering the new entity with the U.S. Internal Revenue Service (if operating in the United States), and the establishment of operations.

For some students, owning and operating their own business is the goal. For others, finding an established business in need of one’s skills and knowledge is the goal. In either case, it is valuable to understand the entrepreneurial nature of the business as envisioned by the person who created the enterprise and/or those who hold the responsibility for running the business day-to-day.

Finance

The securing, handling, and distribution of money is a central functional area for all businesses and requires in-depth knowledge of finance and accounting. Most business programs include courses in accounting to give students a grounding in best practices to account for financial flows, adhere to generally agreed-upon accounting practices, and disseminate financial information to stakeholders. Financial management entails establishing clear financial goals with business owners, drafting budgets, and securing financing, if needed. Both equity financing and debt financing options are potential sources of money to create, build, and grow a business.

Everyone entrusted with running a business, whether a business owner or an employee, benefits from understanding the financial and accounting functional areas of the firm.

Big Data

A new functional area of business introduced in the twenty-first century is big data, known also as data science or behavioral futures markets. With the advent of sophisticated computational hardware and software, businesses today control enormous virtual supply chains of behavioral data on customer preferences, emotions, purchases, life styles, interests, and more. Merchandisers have found ways to monetize these data for the benefit of the world’s advertisers and others who pay for its prediction products that retain and attract more customers.

Big data insights build on the genius of the Ad Men of the twenty-first century and bring new meaning to merchandising. If you are interested in merchandising, the big data functional area is the best starting place for your studies.

Marketing and Public Relations

In addition to big data, merchandisers learn how to harness the four marketing Ps, namely place; product; price; and promotion to increase sales, revenues, and profits for the firm. In the past 10 years, options for novel places to sell products have exploded due to customers carrying devices that allow marketers to micro-target products directly to potential customers, regardless of where the person and the products are physically located. Increasingly, big tech will engage in behavioral modification to “nudge” us toward certain decisions and actions. It is predicted that soon there will be no price tags on merchandise on store shelves as AI-powered sensors and software will generate a unique price for each customer to be posted on the person’s mobile device.

Unique pricing is made possible through big data, handheld devices, beacons, sensors, and predictive analysis, all of which you will study in your marketing courses. The vice presidents for public relations have their work cut out for them in today’s 24-7 news cycle environment that demands increasing communication between business and society.

Going Global

The world of business has also changed significantly over the past 40 years as a result of businesspeople expanding their geographical purview to include all corners of the globe. Financing, for example, is no longer limited to the country in which a business is incorporated. The workforce is no longer limited to a local economy, as workers migrate across state and national borders. The supply of inputs to production moves across the six inhabited continents. Potential customers of products and services may live anywhere on Earth.

Today, 195 sovereign nations engage in $19.5-trillio...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Introduction
• Chapter 1 The Functional Areas of Business
• Chapter 2 Business and the Economy
• Chapter 3 Business Legal Structure
• Chapter 4 Growth
• Chapter 5 Going Global
• Chapter 6 Entrepreneurship
• Chapter 7 Financial Management
• Chapter 8 Equity Finance
• Chapter 9 Debt Finance
• Chapter 10 Big Data
• Chapter 11 Marketing
• Chapter 12 Management
• References
• About the Author
• Index