Business Studies

Business is an integral part of our daily lives. The term is used to describe organisations that operate in a market to sell goods and services for a profit. Businesses can take a variety of different forms and operate in a wide range of different industries. Some organisations’ main goals are maximising profits, while others pursue social and environmental objectives.

It is important to keep in mind that business studies goes beyond explaining the different types of business and understanding finances - you will cover a wide range of topics such as innovation, leadership, global marketing and organisational culture. By studying business you will not only understand how to sell goods and services but gain deeper insight into markets, stakeholders, strategy and decision-making.

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All the topics in business studies.

Nature of Business

As a first step, we have to understand what businesses are and why they exist. Businesses exist to make profit, survive, grow and even reach social aims. One key feature of businesses is that they all have a mission and should have objectives that guide them to attaining their mission.

Another important step is understanding the different forms of business. This is an important concept to consider when making business decisions and evaluating performance.

The external environment also plays an important role in decision making and includes various factors like competition, demographics, the environment or interest rates, which can hugely influence operating costs and the demand for a business’s products and services.

Managers

Management is another key component of business studies. Managers play a key role in all forms of business. Their role is not only about making decisions, analysing, planning and reviewing, but also finding an effective leadership style through which they can motivate and support employees. They also need to understand stakeholder needs and how to manage relationships between various stakeholders. Managers should make decisions based on data and intuition, keeping in mind the mission and objectives of the organisation.

Managers play a key role in all forms of business.

Marketing

Marketing is an integral part of every business. By setting effective marketing objectives, a company can boost its sales, gain market share and increase brand loyalty. To achieve these results, the business needs to understand the market and consumers, which can be done through primary and secondary research. Marketing also involves segmenting consumers, targeting a defined segment and positioning the product or service effectively – through a niche or mass-market strategy. An additional tool for marketing decision-making is the marketing mix, which is made up of the 7Ps:

• Product

• Price

• Promotion

• Place

• People

• Process

• Physical environment

Operational Management

Setting operational objectives is another fundamental part of the business. Operational objectives can include:

• Decreasing costs

• Increasing quality

• Adding value

• Flexibility or dependability

• Environmental goals

Once operational objectives have been set, the business needs to analyse its operational performance. Operational performance can be measured through operational data – by calculating metrics like labour productivity or unit cost. Through these calculations, we can understand the business’s operational strengths and weaknesses and make further decisions on how to optimise efficiency and productivity. Another core concept in operations management is understanding supply chains and managing inventory. These are essential for maximising operational efficiency.

Financial Performance

The financial performance of a business is based on a couple of key factors. The business has to plan, analyse, make decisions and set financial objectives. Financial objectives can include things like:

• Cash flow objectives

• Profit objectives

• Capital expenditure objectives.

These can be measured through performance metrics like return on investment (ROI), profitability ratio analysis, break-even analysis or cash inflows and outflows. Financial performance also includes budgeting, forecasting and sourcing finance. There are many ways businesses can source finance in both the long and the short term. It all comes down to understanding how we can make effective financial decisions that boost the financial performance of the business.

The financial performance of a business.

Human Resources

Human resource decisions can also expand the competitiveness of a business. Human resource objectives could include training, diversity and employee engagement. Both internal and external factors can influence how a business sets human resource objectives.

Human resource is important for a business.

Strategic Analysis

To understand the strategic position of a business we need to analyse its mission, objectives and strategy. We need to look at a business’s internal position and performance to understand where strengths and weaknesses come from. In order to understand opportunities and threats, the business needs to examine its external environment through a PESTLE analysis and the competitive environment through Porter’s five forces.

Strategic Direction

Every business needs to choose a strategic direction - they need to decide which market to operate in, what products to offer and how to enter the selected market. Businesses also need to determine their strategic positioning and sustain their competitive advantage

Every business needs to choose a strategic direction.

Business Development

Once a business has established its strategy, it is time to figure out how to pursue the strategy in a profitable way. It is important to evaluate whether the business is growing and find strategies to overcome problems in case the business is stagnant or growing too quickly. Innovation and internationalisation can play a huge role in the growth of a business. Recently, digital technology has also become valuable for strategy and almost inevitable for businesses to adopt.

Change Management

Change can often be a daunting process for businesses. The causes for change can be internal or external but either way, it can be very valuable for strategy. The problem is that change often comes with resistance. Managers have to successfully overcome barriers to change by leading organisational culture and implementing strategy effectively.