Principles of Business: Markets, Innovation, Finance, and Marketing

This report provides a comprehensive overview of key business principles, encompassing market analysis, business innovation, financial viability, and marketing strategies. It delves into the characteristics of different business markets, the nature of interactions between businesses and markets, ...Read More

PRINCIPLE OF BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................2
LO 1.................................................................................................................................................2
1.1 Characteristic of different business market...........................................................................2
1.2 Nature of interaction between business with a market..........................................................2
1.3 Organisation goal may be shaped by the market..................................................................2
1.4 Legal obligation ...................................................................................................................3
LO 2.................................................................................................................................................3
2.1 Business innovation..............................................................................................................3
2.2 Model of business innovation...............................................................................................3
2.3 Sources and support business innovation..............................................................................3
2.4 Process of product and services development.......................................................................4
2.5 Benefit, risks and implications of innovation.......................................................................4
LO 3.................................................................................................................................................5
3.1 Financial viability for organisation.......................................................................................5
3.2 Consequences of poor financial management\......................................................................5
3.3 Different financial terminology.............................................................................................6
1. Assets..................................................................................................................................6
2. Liabilities............................................................................................................................6
3. Expenses.............................................................................................................................6
LO 4.................................................................................................................................................6
4.1 Use of budget .......................................................................................................................6
4.2 How to manage budget..........................................................................................................6
LO 5.................................................................................................................................................7
5.1 Principal of marketing...........................................................................................................7
5.2 Sales process.........................................................................................................................7
5.3 Feature and use of market research.......................................................................................7
5.4 Value of brand.......................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Business management is very important for the organisation as it has direct relationship
with its outcome. If company effectively manage its business activities and function then it can
get the huge success in the market. The current project provides the effective knowledge about
the different business market. Business innovation, Model of business innovation and support
business innovation
LO 1
1.1 Characteristic of different business market
In perfect competition there are multiple companies offering the same, or very similar
products, and even though there are many competitors, none of them are big enough to influence
the price of any identical products. This is where there is a market structure where there are some
but not all the features of a competitive market. (Mitchell, R. K. and et.al., 2010) A competitive
market is one in which a large number of producers compete with each other to satisfy the wants
and needs of many consumers. In a competitive market no single producer, or group of
producers, and no single consumer, or group of consumers, can dictate how the market operates.
1.2 Nature of interaction between business with a market
B2B customer interactions are influenced by what are typically long and complex buying
processes and tend to be more relationship-based. Business-customer interactions occur over a
wide range of communication channels, such as phone, email, web, and text. These exchanges
also happen outside of organizational control such as conversations on social media. Although
business-to-business (B2B) companies use many of the same communication channels as
business-to- consumer ( B2C ) companies, certain characteristics of B2B customer interactions
differentiate them within the marketplace.
1.3 Organisation goal may be shaped by the market
Our radio goals are shaped by what our listeners want to hear, for example if we’re
playing 80s music but our listeners tell us they want to hear songs from the 1990’s then we will
have to aspire to play more 90’s music to accommodate what they want(Backer,2015). For me as
a journalist if listeners say they want to hear more about a local sports team then me and my
team will have to aspire to offer better coverage of that team. Our focus has to be to give listener
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a reason to listen to us and not another station and we do that by shaping of goals around what
they want.
1.4 Legal obligation
When starting a business there are a number of legal obligations you must follow. Firstly
the Corporations Act 2001 has all the requirements a business owner must abide by in terms of
the structure of his/her business, an example would submit your annual return.There are legal
obligations for most small businesses (Baird and Baird 2017). They will vary depending on the
nature of the business.
To avoid problems in the future it is important to understand your obligations (Gonzalez-Padron
Hult and Ferrell, 2016). Typically, most business will have some legal responsibilities relating to
business structure and registrations, licensing , selling goods and services, contracts ,leasing
premises ,employing staff.
LO 2
2.1 Business innovation
Business innovation is an organization's process for introducing new ideas, workflows,
methodologies, services or products. Innovation often begins with idea generation, wherein ideas
are narrowed down during brainstorming sessions, after which leaders consider the business
viability, feasibility and desirability of each idea. Business innovation should improve on
existing products, services or processes; or it should solve a problem; or it should reach new
customers.
2.2 Model of business innovation
Business model innovations have reshaped entire industries and redistributed billions of
dollars of value. Yet cases from well-established companies, like Apple, are rare. An analysis of
major innovations within existing corporations over a decade shows that precious few have been
business-model related. And a recent American Management Association study determined that
no more than 10% of innovation investment at global companies is focused on developing new
business models..
2.3 Sources and support business innovation
Internal sources of finance are critical for firms’ innovation activities. This includes
notably retained earnings, the profits accumulated over time which have not been returned to
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shareholders. Firms often use internal financing rather than external financing. Sources as
diverse as money and capital provided by family and friends to start a business as well as
entrepreneurs’ personal financial resources can be important resources for innovative
entrepreneurs.
2.4 Process of product and services development
New product development is a process of taking a product or service from conception to
market.The process sets out a series of stages that new products typically go through, beginning
with ideation and concept generation, and ending with the product's introduction to the market.
Occasionally, some of the stages overlap or vary depending on the nature of the business.
Idea generation – brainstorming and coming up with innovative new ideas. See generating ideas
for new products and services.
2. Idea evaluation - filtering out any ideas not worth taking forward. See screening new
product or service idea.
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4. Strategic analysis - ensuring your ideas fit into your business' strategic plans and
determining the demand, the costs and the profit margin.
5. Product development and testing - creating a prototype product or pilot service. See
concept development and testing.
6. Market testing - modifying the product or service according to customer, manufacturer
and support organisations' feedback. This involves deciding the best timing and process for
piloting your new product or service. See how to test the market.
7. Commercialisation – determining the pricing for your product or service and finalising
marketing plans. See pricing your proposed service or product.
8. Product launch – a detailed launch plan can help ensure smooth introduction to market.
2.5 Benefit, risks and implications of innovation
BENEFITS OF INNOVATION
Improved productivity & reduced costs
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A lot of process innovation is about reducing unit costs. This might be achieved by improving
the production capacity and/or flexibility of the business – to enable it to exploit economies of
scale
Better quality
By definition, better quality products and services are more likely to meet customer needs.
Assuming that they are effectively marketed, that should result in higher sales and profits
RISKS OF INNOVATION
A strategy of investing in R&D and innovation can bring significant rewards, but it is not
without risk. Amongst the potential pitfalls are:
Competition
An innovation only confers a competitive advantage if competitors are not able to replicate it in
their own businesses. Whilst patents provide some legal protection, the reality is that many
innovative products and processes are hard to protect. (Grünig, and Kühn, 2015)
Uncertain commercial returns
Much research is speculative and there is no guarantee of future revenues and profits. The longer
the development timescale the greater the risk that research is overtaken by competitors too.
LO 3
3.1 Financial viability for organisation
Financial viability is the ability to generate sufficient income to meet operating
payments, debt commitments and, where applicable, to allow growth while
maintaining service levels.Assessment of financial viability is an integrated process involving a
review of an organisation’s audited financial statements, financial performance reports, business
plan and other information that supports financial analysis
3.2 Consequences of poor financial management\
Competent financial management involves meticulous bookkeeping and proper planning. As a
business owner you need to be able to manage your cashflow so that you can pay expenses like
your rent, utilities and payroll on time. (Shi, 2016.) To do this, you need to spread your
expenditure across the year and give your clients or customers strict payment terms. Depending
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on the industry you work in, you may ask your customers to pay upfront or on completion or
receipt, or you may agree a payment date.
3.3 Different financial terminology
1. Assets
These are the economic resources a business has, including the products it has in inventory, the
office furniture and supplies purchased for use, and any trademarks or copyrights it owns.
2. Liabilities
This includes any debt accrued by a business in the course of starting, growing and maintaining
its operations, including bank loans, credit card debts, and monies owed to vendors and product
manufacturers (Jaber and et.al., 2015).
3. Expenses
Business expenses are the costs the company incurs each month in order to operate, including
rent, utilities, legal costs, employee salaries, contractor pay, and marketing and advertising costs.
To remain financially solid, businesses are often encouraged to keep expenses as low as possible.
LO 4
4.1 Use of budget
A budget helps you to be organised when it comes to managing your finances, in terms of
a business it helps you work out what money you can afford to spend on expenses while still
making a reasonable profit. An example of this in our company might be we have a £100,000
budget for a year and in that year we have to try stay within that budget (Houdet, Trommetter
and Weber, 2012). The company may need to spend £30,000 on new radio equipment, £20,000
on a new member of staff, £50,000 thousand on petrol expenses across the group and a further
£10,000 on building rent(Tasioulas,2015).
4.2 How to manage budget
When managing a budget it’s important to leave some room for compromise, that way
you can allow for unexpected costs. For example if you work out that the next 12 months will
cost your company £100,000 in expenses, it’s good to then budget for a £120,000 so if some
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expensive equipment then brakes an costs you £10,000 extra to repair it, you’ll not go over your
budget.
LO 5
5.1 Principal of marketing
Marketing is all activities conducted to prepare for sales. Sales is all activities required
to close the deal. Shipping and customer satisfaction would be included in sales to avoid the
customer from reversing or unclosing the deal (Staake, Thiesse and Fleisch, 2012). Marketing
refers to channeling the gap between service and product providers to service and product
seekers. Also known as a way of satisfying needs
5.2 Sales process
Each company will have a slightly different way in how they sell their product, for
example in a retail shop such as All Saints the staff may approach a customer when they come
into the shop and politely offer assistance (Amran, Ooi and Devi, 2015) then will then allow you
to shop and only help you when needed but in other more high end retail stores staff may be told
to personally assist each costumer individually in order to try make a sale.
5.3 Feature and use of market research
Accounts payable - a record of all short-term (less than 12 months) invoices, bills and other
liabilities yet to be paid. Examples of accounts payable include invoices for goods or services,
bills for utilities and tax payments due.
 Accounts receivable - a record of all short-term (less than 12 months) expected
payments, from customers that have already received the goods/services but are yet to
pay. These types of customers are called debtors and are generally invoiced by a business
(Kernbach, Eppler and Bresciani, 2015).
 Accrual accounting - an accounting system that records transactions at the time they
occur, whether the payment is made now or in the future.
5.4 Value of brand
Consumers regularly pay more for branded products as compared to store brands, and
they will pay even more for a premium brand as compared to a mass-market brand. A company
is made up of both tangible and intangible assets.Tangible assets include things like machinery,
buildings and land, as well as inventory (Leitner, Meissner, and Martyna-David, 2015).
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Intangible assets are non-physical in nature. A brand or trademark is an intangible asset that is
often referred to in a broader context as intellectual property.
CONCLUSION
From this report it has been concluded that A budget helps you to be organised when it
comes to managing your finances, in terms of a business it helps you work out what money you
can afford to spend on expenses while still making a reasonable profit. By definition, better
quality products and services are more likely to meet customer needs. Assuming that they are
effectively marketed, that should result in higher sales and profits. New product development is a
process of taking a product or service from conception to market. Internal sources of finance are
critical for firms’ innovation activities. This includes notably retained earnings, the profits
accumulated over time which have not been returned to shareholders
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REFERENCES
Journal and books
Leitner, J., Meissner, H. and Martyna-David, E., 2015. The Debate About Political Risk: How
Corruption, Favoritism and Institutional Ambiguity Shape Business Strategies in Ukraine.
In EU Crisis and the Role of the Periphery. Springer International Publishing. pp. 3-19.
Kernbach, S., Eppler, M.J. and Bresciani, S., 2015. The Use of Visualization in the
Communication of Business Strategies An Experimental Evaluation. International Journal
of Business Communication. 52(2). pp.164-187.
Amran, A., Ooi, S.K. and Devi, S.S., 2015. The Impact of Business Strategies on Online
Sustainability Disclosures. Business Strategy and the Environment. 24(6). pp.551-564.
Staake, T., Thiesse, F. and Fleisch, E., 2012. Business strategies in the counterfeit market.
Journal of Business Research. 65(5). pp.658-665.
Houdet, J., Trommetter, M. and Weber, J., 2012. Understanding changes in business strategies
regarding biodiversity and ecosystem services. Ecological Economics. 73. pp.37-46.
Jaber, J.O. and et.al., 2015. Employment of renewable energy in Jordan: Current status, SWOT
and problem analysis. Renewable and Sustainable Energy Reviews.49. pp.490-499.
Shi, X., 2016. The future of ASEAN energy mix: A SWOT analysis. Renewable and Sustainable
Energy Reviews. 53. pp.672-680.
Grünig, R. and Kühn, R., 2015. Strategy Planning Process. In The Strategy Planning Process.
Springer Berlin Heidelberg.
Gonzalez-Padron, T. L., Hult, G. T. M. and Ferrell, O. C., 2016. A Stakeholder Marketing
Approach to Sustainable Business. Marketing in and for a Sustainable Society (Review of
Marketing Research, Volume 13) Emerald Group Publishing Limited. 13. pp.61-101.
Mitchell, R. K. and et.al., 2016. Stakeholder agency and social welfare: Pluralism and decision
making in the multi-objective corporation. Academy of Management Review. 41(2).
pp.252-275.
Baird K. and Baird K. 2017. The effectiveness of strategic performance measurement
systems. International Journal of Productivity and Performance Management 66(1), pp.3-
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Bjerke M. B. and Renger R. 2017. Being smart about writing SMART objectives. Evaluation
and program planning 61 pp.125-127.
Johnson G. 2017. Exploring strategy: text and cases. Pearson.Knowledge management as a
factor for the formulation and implementation of organization strategy. Journal of
Knowledge Management 21(2) pp.308-329.
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