Principles of Business: An Analysis of Business Fundamentals

This report provides a comprehensive overview of fundamental business principles, encompassing five key tasks. Task 1 analyzes the characteristics of different business markets, the nature of interactions between businesses, how organizational goals are shaped by the market, and the legal obligations of a business. Task 2 delves into business innovation, exploring its uses, sources of support, and the process of product or service development, along with associated benefits, risks, and implications. Task 3 focuses on financial viability, highlighting its importance, the consequences of poor financial management, and different financial terminologies. Task 4 discusses the uses of a budget and how to effectively manage it. Finally, Task 5 examines the principles of marketing, the sales process, market research, the value of branding, and the relationship between sales and marketing. The report concludes with a synthesis of the key takeaways from each task, emphasizing the interconnectedness of these principles in achieving business success.

PRINCIPLES OF BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Characteristics of different business markets........................................................................1
1.2 Nature of interactions between business within a market.....................................................1
1.3 How an organization's goals may be shaped by the market in which is operates.................2
1.4 The legal obligations of a business.......................................................................................2
TASK 2............................................................................................................................................2
2.1 Business innovation..............................................................................................................2
2.2 Uses of models of business innovation.................................................................................3
2.3 Sources of support and guidance for business innovation....................................................3
2.4 Process of product of service development...........................................................................3
2.5 The benefits, risks and implications associated with innovation..........................................4
TASK 3............................................................................................................................................4
3.1 Importance of financial viability for an organization...........................................................4
3.2 Consequences of poor financial management.......................................................................5
3.3 Different financial terminology.............................................................................................5
TASK 4............................................................................................................................................5
4.1 Uses of a budget....................................................................................................................5
4.2 How to manage a budget.......................................................................................................6
TASK 5............................................................................................................................................6
5.1 Principle of marketing...........................................................................................................6
5.2 Sales process.........................................................................................................................7
5.3 Features and uses of market research....................................................................................7
5.4 Value of a brand to an organization......................................................................................7
5.5 Relationship between sales and marketing...........................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Principles are more basic than policy and objectives, and are meant to govern both.
Fundamental norms, rules, or values that represent what is desirable and positive for a person,
group, organization, or community, and help it in determining the rightfulness or wrongfulness
of its actions (Aronoff and Ward, 2016). It provides a framework to assist in more informed
decision-making by individuals in their role of producers or consumers. This project discussed
about various characteristics of business markets. Along with this, business innovation is also
mentioned in this assignment which helps in introducing fresh services to their customers.
TASK 1
1.1 Characteristics of different business markets
Successful marketing strategies depend on a clear understanding of market
characteristics. Before budgeting marketing dollars, management needs to know the size of the
market, the competitive environment, the customer profile, the distribution system and the key
success factors. Business markets are defined as all organisations that procure products or
services that are consequently used in manufacturing other goods and facilitating service for
other consumers.
 business to business market
 Industrial market
 professional services and Financial services
 Government
 High Street
1.2 Nature of interactions between business within a market
An example of the nature of interactions businesses can have between each other could
be a baker decides he’s going to open up a factory that makes and sells bread, he then interacts
with a multi million pound company such as Virgin Atlantic who’re looking for another business
to make sandwiches for their flight meals. They would most likely test his products then once
they were happy with the quality of his bread they’d agree a contract with the baker and both
companies would hopefully find the deal profitable. This is an example of how good interactions
between businesses can lead to great results for both parties (Bryman and Bell, 2015).
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1.3 How an organization's goals may be shaped by the market in which is operates
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. 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 a reason to listen
to us and not another station and we do that by shaping of goals around what they want.
1.4 The legal obligations of a business
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 submitting your annual return.
If you decide to employee staff you will also have to follow several other legal requirements
such as the Anti Discrimination Act 1991 to ensure your staff are treated fairly (Chang, 2016).
Health and Safety is also an element when having a work force, it’s important to make sure they
comply with the Work Health and Safely Act 2011. Finally if you’re leasing a property it’s
important to stick to the Retail Shop Leases Act 1994.
TASK 2
2.1 Business innovation
Business innovation is an organization's process for introducing new ideas, workflows,
methodologies, services or products. Business innovation should enable the achievement of goals
across the entire organization, with sights set on accomplishing core business aims and
initiatives. Business innovation should improve on existing products, services or processes; or it
should solve a problem; or it should reach new customers. The purpose of the business
innovation process is to create value for the organization. That value can come from creating
new revenue opportunities or driving more revenue through existing channels; from creating
efficiencies that save time, money or both; or from improvements to productivity or
performance.
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2.2 Uses of models of business innovation
Business innovation can be grouped in various categories, or models. Some are self-
explanatory, such as product or process innovations. Other types, and what they mean,
include:
 Business model innovation: the development and implementation of new, unique
concepts supporting an organization's financial viability, including its mission (Eriksson
and Kovalainen, 2015).
 Industry model innovation: the creation of a new industry or an organization's move into
a new industry.
 Revenue model innovation: improvements and/or changes to an organization's framework
for generating revenue, a goal also encompassed in the term, business model innovation.
2.3 Sources of support and guidance for business innovation
There are several sources of support you can use in order to move the business forward.
These can be internal or external, and what you use is a personal choice.
Internal support can come from market research, customer focus groups, workshops, senior
management teams, boards of directors and internal stakeholders.
External support can come from local enterprise partnerships, Business Networking groups
(BNI, Chambers of Commerce, etc.), websites, industry, government (policy, guidance, funding),
trade bodies, Intellectual Property Office, trade events, external stakeholders and others.
2.4 Process of product of service development
Idea generation– brainstorming and coming up with innovative new ideas. See
generating ideas for new products and service.
 Idea evaluation- filtering out any ideas not worth taking forward. See screening new
product or service idea.
 Strategic analysis- ensuring your ideas fit into your business' strategic plans and
determining the demand, the costs and the profit margin.
 Product development and testing- creating a prototype product or pilot service. See
concept development and testing.
 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 (Falkner, 2017). See how to test the market.
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 Commercialisation– determining the pricing for your product or service and finalising
marketing plans. See pricing your proposed service or product.
 Product launch– a detailed launch plan can help ensure smooth introduction to market.
2.5 The benefits, risks and implications associated with innovation
Benefits: are as follows:
 Improved productivity & reduced costs.
 Better quality.
 Building a product range.
 To handle legal and environmental issues.
 More added value. Improved staff retention, motivation and easier recruitment.
Risk: It associates with several points that are as beneath:
 Competition
 Uncertain commercial returns
 Availability of finance
TASK 3
3.1 Importance of financial viability for an organization
Financial viability is extremely important in any business because making financially
viable decisions can determine whether your business is successful or not. Making sure
something is financially viable simply means to ensure it’s profitable and you can afford it. An
example in our organisation would be we purchased an IPhone for the news team to use as a
recoding device as well as a phone. It most likely cost around £300 but has helped us gather
hundreds of top quality interviews over the past 12 months, which will have hopefully increased
the amount of listeners we have and because of the increase in listeners more companies will
have decided to advertise with us so our revenue will have increased (Ferraro and Briody, 2017).
That means it was financially viable to invest in the IPhone even though it cost the company at
the beginning.
3.2 Consequences of poor financial management
As I touched upon in the last answer it’s very important to make financially viable
decisions because if you make the wrong decisions it can land your company in debt. When
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making a financial decision it’s key to really think about what the consequences might be if your
decision isn’t financially viable. If a company decides to spend money on items that are
expensive but won’t really improve their business then they will soon find themselves in lots of
debt, they could have to make cut backs or make people redundant to survive as a business
(Schumpeter, 2017). That’s why it’s vital to carefully think about every decision you make in
business.
3.3 Different financial terminology
 Turnover – The amount of money a company has taken over a period of time.
 Gross Profit – The amount of money a company has made after allowing for the cost of
it’s product and the cost of selling the product (Storey, 2016).
 Net Profit – Net profit is the actual profit a company has made after working expenses.
 Debt – Debt is an amount of money that you owe to someone or a company.
 Credit – Is the ability to allow a customer to obtain goods or services without paying for
them first but with the knowledge they will pay for them at a later date.
TASK 4
4.1 Uses of a 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. 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. If that was the case
and they over spent by £10,000 it would mean that money would eat into the companies profits
therefore its important to try stick to your budget when possible.
4.2 How to manage a budget
When managing a budget it’s important to leave some room for compromise, that way
you can allow for unexpected costs (Rendtorff, 2016). 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 expensive equipment then brakes and it costs you £10,000 extra to repair it, you’ll not
go over your budget. A budget can also change through out the year depending on profits, if your
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company have a large increase in profits you may be able to afford to increase your budget to
match the growth of your business just as if your company have a dip in profits you may also
have to reduce your budget. The best way to manage a budget is to constantly keep an eye on
what you’re spending an review your budget regularly.
TASK 5
5.1 Principle of marketing
Marketing refers to channelling the gap between service and product providers to service
and product seekers. Also known as a way of satisfying needs. Marketing is an ongoing process
driven by core principles such as identifying and targeting the right customer markets, preparing
an effective marketing mix, creating high-impact messages and building a consistent image.
Target Marketing: Marketing typically begins with identifying customers who best align
with a company's core strengths and capabilities. The ideal market segments have compelling
needs or preferences that the business is equipped to service.
The Marketing Mix: This mix is a set of primary marketing factors that integrate to create
a cohesive strategy. The components include product, place, price and promotion. The product or
solution is the specific mix of benefits in the brand's offering. Place, or distribution, refers to the
ability of a company to meet a customer's desire for easy and convenient access (Neubauer and
Lank, 2016). Price reflects the value the marketplace gives to a product, or the position the
company intends to establish on the price-quality scale. Promotion refers to the specific
strategies used to communicate the offering to the target market.
Creative and Influential Messages: Creativity and emotional appeals in advertising are
among the most enduring marketing principles. Creativity is the soul of branding because
companies use it to attract attention and generate a response from the target market in a cluttered
environment.
A Consistent Brand Image: Building a unique and consistent brand image is another of
the most enduring marketing principles, according to author and international business coach
Mike Calder wood (LU and YANG, 2016). The first step to effective branding is the
development of a solution with distinct and sought-after benefits.
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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, 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. In radio terms our process is as follows, our
sales team will meet with potential clients who may be interested in a radio add, they will then
ensure they can produce what the customer requires and give them a price (Teplicka, Culkova
and Zeleznik, 2015). If the customer is happy they will send the add off to our productions team
to have it made, once the customer is happy with their finished add they will choose a slot for it
to be aired and it will be on the radio. Our sales team will then bill the client and ensure they’re
happy with the work.
5.3 Features and uses of market research
Market research is vital when setting up a business or preparing to sell a product. If you
don’t know the market you’re entering into it’s very likely you won’t find it easy to compete.
The way to conduct market research is to start by finding out who are your main competitors in
the market, so as an example if you were setting up a mobile phone company you may want to
look at O2 or EE. It’s important to think about what your competitors do well at as well as
thinking about what they could improve on. If a business can do well at the same things as its
competitors but at the same time offer something new and different then it’s likely to succeed.
5.4 Value of a brand to an organization
The brand of an organisation is it’s identity and it means everything. MacDonald’s,
Apple, Nike would never have been successful with out those famous iconic brands and logos.
Your brand is what makes you as a company, because once a customer likes your brand they will
continue to come back to buy more from you (Hair, 2015). In our place of work we use our
brand to promote everything we do. At events we use mascots wearing the logo and also flags
with the logo on. Our cars are all branded which all contributes to promoting us as a radio
station.
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5.5 Relationship between sales and marketing
Marketing helps generate sales leads then it’s the job of a sales team to execute the deal
(Ward, 2016). For example on Trax FM we might run a marketing campaign offering new
customers a discount in air time, that in turn will attract people to call our sales team and enquire
about the deal which hopefully the sales team will then be able to turn into revenue.
CONCLUSION
From the above mentioned report, it can be concluded that principle of business is one of
the significant activity which helps in implementing all the marketing activities in order to invite
large number of customers. With the help of this company easily enhance their overall sales and
profitability also.
REFERENCES
Books and journals
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Aronoff, C. and Ward, J., 2016. Family business values: How to assure a legacy of continuity
and success. Springer.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Chang, J. F., 2016. Business process management systems: strategy and implementation. CRC
Press.
Eriksson, P. and Kovalainen, A., 2015. Qualitative methods in business research: A practical
guide to social research. Sage.
Falkner, R., 2017. Business power and conflict in international environmental politics. Springer.
Ferraro, G. P. and Briody, E. K., 2017. The cultural dimension of global business. Taylor &
Francis.
Hair, J. F., 2015. Essentials of business research methods. ME Sharpe.
LU, M. F. and YANG, L., 2016. A Research on the Derivation and Development of Growth
Chain Finance Principle. Journal of Huaqiao University (Philosophy & Social
Sciences). 2. p.004.
Neubauer, F. and Lank, A. G., 2016. The family business: Its governance for sustainability.
Springer.
Rendtorff, J. D. ed., 2016. Power and principle in the market place: On ethics and economics.
Routledge.'
Schumpeter, J. A., 2017. Essays: on entrepreneurs, innovations, business cycles and the
evolution of capitalism. Routledge.
Storey, D. J., 2016. Understanding the small business sector. Routledge.
Teplicka, K., Culkova, K. and Zeleznik, O., 2015. Application of bayess principle optimum-
optimization model for managerial decision and continual improvement. Polish Journal
of Management Studies. 12(2). pp.170-179.
Ward, J., 2016. Keeping the family business healthy: How to plan for continuing growth,
profitability, and family leadership. Springer.
YANG, Z. and REN, Z., 2016. The Dual Symbiosis Phenomenon and Its Guiding Principle of
College Students' Entrepreneurial Motivation. Journal of Higher Education
Management. 5. p.020.
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