Business Principles: Market Analysis, Innovation, and Finance Report

This report on the Principles of Business provides a comprehensive overview of key business concepts. It begins by examining different business markets, the nature of interactions within them, and how market forces shape organizational goals. The report then delves into business innovation, exploring its definition, various models, sources of support, and the product/service development process, along with associated benefits, risks, and implications. Financial viability is also addressed, including its importance, the consequences of poor financial management, and explanations of key financial terminology. The report further discusses budgeting, marketing principles, the sales process, market research, and the value of branding, as well as the relationship between sales and marketing. The report covers various aspects of business, from market analysis to financial management and marketing strategies, providing a holistic understanding of business operations and principles.

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 businesses within in a market.............................................1
1.3 How an organisation’s goals may be shaped by the market in which it operates.................2
1.4 Describe the legal obligations of a business.........................................................................2
TASK 2............................................................................................................................................3
2.1 Define business innovation...................................................................................................3
2.2 Explain the uses of models of business innovation...............................................................3
2.3 Identify sources of support and guidance for business innovation.......................................3
2.4 Explain the process of product or service development........................................................4
2.5 Explain the benefits, risks and implications associated with innovation..............................4
TASK 3............................................................................................................................................4
3.1 Explain the importance of financial viability for an organisation.........................................4
3.2 Explain the consequences of poor financial management....................................................4
3.3 Explain different financial terminology................................................................................5
TASK 4............................................................................................................................................5
4.1 Explain the uses of a budget..................................................................................................5
4.2 Explain how to manage a budget..........................................................................................5
TASK 5............................................................................................................................................6
5.1 Explain the principals of marketing......................................................................................6
5.2 Explain a Sales process.........................................................................................................6

5.3 Explain the features and uses of market research.................................................................6
5.4 Explain the value of a brand to an organisation....................................................................6
5.5 Explain the relationship between sales and marketing.........................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Principles of Business focuses on the theoretical and practical aspects of business
activities. It provides a framework to assist in more informed decision-making by individuals in
their role of producers or consumers (Sekaran and Bougie, 2016). This report provides
opportunity for people to develop entrepreneurial and managerial skills necessary to survive and
prosper in a local, regional and global dynamic business environment. It also engages learners in
conducting research which helps to improve their communication and critical thinking skills and
creates an awareness of business ethics and social responsibilities.
TASK 1
1.1 Characteristics of different business markets
All businesses market their products and services, albeit there will be differences in the
way each business approaches their market(s). The main types of market include:
 Business-to-Business (B-2-B or B2B) Market: The business-to-business market is one in
which businesses sell to other businesses, rather than to consumers.
 Consumer Market: A consumer market is one in which products and services are sold by
businesses to consumers.
 Service Market: A service market is one in which a business sells its services directly to
individual consumers (Muller, 2013).
 Industrial Market: Industrial markets are ones in which industrial or production products
or commodities are sold to other industries.
 Professional Services Market: Professional services markets are ones in which a
professional service such as legal advice, financial advice or consultancy is sold to both
business and individual clients.
1.2 Nature of interactions between businesses within in a market
B2B interaction is usually protracted because of a tendency to have many more people
involved in the purchasing decisions than is the case in business to consumer markets.
Consequently, there can be a greater emphasis on developing a long-term relationship based on
mutual trust. This tends to result in high levels of brand loyalty and repeat sales. Much of the
initial contact in B2B is done via trade publications, trade exhibitions and conferences as well as
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through the Internet. Similar routes to market are used for advertising and developing brand
awareness.
Account managers and sales representatives tend to look after the relationship
management between business customers and will seek to keep customers informed of
improvements to product or service range and offerings (Li and Sun, 2011). After sales service
will account for a lot of interaction as maintaining the satisfaction of the business client is
fundamental to repeat and additional sales.
1.3 How an organisation’s goals may be shaped by the market in which it operates
In market there exits some outer factors that impact on goals of venture. They are :
 Key political influences are likely to impact on the marketing of the business
 Significant economic factors
 Sociological aspects are most prominent
 Technological advances are imminent
 Current and future legislation might affect the business
 Environmental issues need to be considered
1.4 Describe the legal obligations of a business
Different laws that needs to followed within a business are listed below :
 Adoption Leave and Pay
 Age Discrimination
 Agency Workers Regulations 2010
 Automatic Enrolment into Qualifying Workplace Pension Schemes.
 Bonus Scheme
 Criminal Records and Employment
 Part-Time Workers
 Paternity Leave and Pay
 Preventing Illegal Working
 Protection from Harassment Act 1997
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TASK 2
2.1 Define business innovation
Business innovation is an organization's process for introducing new ideas, workflows,
methodologies, services or products. Innovation generally refers to changing processes or
creating more effective processes, products and ideas. For businesses, this could mean
implementing new ideas, creating dynamic products or improving your existing services.
2.2 Explain the uses of models of business innovation
There are three models of business innovation :
 Product Innovation : Product innovation includes development of a new product,
improvement of the performance of the existing product and a new feature to an existing
product .
 Process Innovation : Process innovation can include changes in the equipment and
technology used in manufacturing (including the software used in product design and
development), improvement in the tools, techniques, and software solutions, etc.
(BUSINESS INNOVATION, 2017)
 Business Model Innovation : Business model innovation is probably the most challenging
of the innovation types as it will likely present an organization with major requirements
for change. Often, the very capabilities or processes that have been optimized to make a
company successful and profitable will become the targets for transformation.
2.3 Identify sources of support and guidance for business innovation
Company research and development (R&D) professionals and accountants will want to
ensure that their businesses are making full use of the extensive range of government support
available for businesses undertaking R&D and innovation. This support helps companies to
develop the new products and services they need to remain competitive and grow. Sources for
help and support include local Councils, Government departments, banks, private investors and
sponsors, along with a host of business incubation services (Teece, 2010). The IPP aims to
provide policy practitioners with a simple and easy-to-use tool, supporting them in the
innovation policy-making process. Firms often use internal financing rather than external
financing. Several factors shape firms' decisions to allocate their own resources to financing
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innovation: 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.
2.4 Explain the process of product or service development
In order to create a product or service you firstly must come up with an idea. The next
step is to consider is their a market for your product, do people want to buy it? Then you must
create strategic plan to decide how you’re going to sell your product. The next step is to create a
prototype of your product and test it with your target audience. Once you’re happy that your
products works and it’s what your target customer wants on the market then you must promote
and finally launch your product to the market.
2.5 Explain the benefits, risks and implications associated with innovation
Benefits : Innovation can help businesses improve productivity and profitability, reduce
costs and be more competitive in a fast changing market environment. Innovation is the main
driver of business growth.
The risks can be your new product is not accepted by the market, your company
becomes dependant on the new product or it may take heavy investment with little reward if the
product fails to be a success (Zott, Amit and Massa, 2011) .
The implications of innovations can include the expense cost of creating new ideas or
products, sometimes small companies may even have to look at expanding to innovate and also
resource’s play a huge part, if you only have a small team of employees who’re all extremely
busy then it makes it practically impossible to innovate effectively.
TASK 3
3.1 Explain the importance of financial viability for an organisation
To be financially viable, a business needs to have sufficient funds to pay its current
liabilities (bills) and to carry on trading. Any business that does not have access to sufficient
funds is trading is insolvent and trading illegally. If a business makes a loss then it needs to be
able to absorb that loss to enable it to carry on. For continued viability a business needs to be
profitable and needs to ensure that it has firm control over both debtors and creditors.
3.2 Explain the consequences of poor financial management
Major results of poor financial management are :
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 Debt : If company do not maintains its financial budgets then, it is sure they receives debt
in their business.
 Surviving beyond means : Company also can not survive even a single day without
adequate money.
 Ill-preparedness for Unexpected Events : Some events occurs accidentally or randomly
and if firm do not maintain their balance regarding revenue, then this hits a lot adversely
to their performance.
3.3 Explain 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.
 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 (Li and Sun,
2011).
 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 Explain the uses of a budget
A budget is a plan for income and expenses, which allows a business to operate within its
means. Three are major uses are: planning, motivation, and evaluation; two are minor:
coordination and education. Planning—Operational budgets are plans; they provide details of
what management hopes to accomplish and how. Budgets provide the direction in that a budget
represents a quantification of management's objectives.
4.2 Explain 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. A budget can also change through out the year depending on
profits, if your 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. Ways to manage budgets are mentioned below :
 Step 1: Set Goals
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 Step 2: Calculate Income and Expenses
 Step 3: Analyse spending and balance of Check-book
 Step 4: Revisit original Budget
 Step 5: Commitment
TASK 5
5.1 Explain the principals of marketing
The five principles of marketing include what are commonly known as the four Ps, plus a
more recent fifth principle: product, price, promotion, place and people. The marketing industry
dictates that without these elements, an effective and complete marketing plan is impossible. To
ensure the success of any business, a mix of these five principles must be understood and
executed properly .
5.2 Explain a Sales process
Selling is a process with distinct steps that should be followed in order to achieve
success. The steps include prospecting, preparation, approach, presentation, handling objections,
closing and follow-up (Olawale and Garwe, 2010).
5.3 Explain the features and uses of market research
Market research analysts gather and analyse data on consumers and competitors. Market
research analysts study market conditions to examine potential sales of a product or service.
They help companies understand what products people want, who will buy them, and at what
price. The four main uses of market research, by commercial organisations, in descending order
of importance (in terms of spend) are: Monitoring performance, for example ad tracking, brand
awareness, viewing figures, usage, customer satisfaction, mystery and shopping.
5.4 Explain the value of a brand to an organisation
Brands are psychology and science brought together as a promise mark as opposed to a
trademark. Products have life cycles. Brands outlive products. Brands convey a uniform quality,
credibility and experience. Brands are valuable. Many companies put the value of their brand on
their balance sheet. Thus, to maintain brand value is mandatory to every business as their whole
business depends on this.
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5.5 Explain the relationship between sales and marketing
Businesses use marketing in order to increase sales in the long-term. While marketing
and sales are related in business, they are not the same thing (Block, 2011). They both play a
crucial role in the success of most businesses and as a business owner it is important to
understand how they work together. Marketing helps generate sales leads then it’s the job of a
sales team to execute the deal.
CONCLUSION
From the above based report, this can be concluded that there are different business
markets such as Business to business market, Industrial market, professional services and
Financial services, etc. All of such businesses follow some principles which has been explained
in this report. Nature of interactions between businesses within in a market has also been
described here. Additionally, uses of a budget and how to manage a budget is also discussed in
this project.
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REFERENCES
Books and journals
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons.
Muller, A.B. ed., 2013. The Magellanic Clouds: A European Southern Observatory Presentation:
Principal Prospects, Current Observational and Theoretical Approaches, and Prospects
for Future Research (Vol. 23). Springer Science & Business Media.
Li, H. and Sun, J., 2011. Principal component case-based reasoning ensemble for business failure
prediction. Information & Management. 48(6). pp.220-227.
Olawale, F. and Garwe, D., 2010. Obstacles to the growth of new SMEs in South Africa: A
principal component analysis approach. African journal of Business management. 4(5).
p.729.
Li, H. and Sun, J., 2011. Empirical research of hybridizing principal component analysis with
multivariate discriminant analysis and logistic regression for business failure prediction.
Expert Systems with Applications. 38(5). pp.6244-6253.
Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future
research. Journal of management. 37(4). pp.1019-1042.
Block, J.H., 2011. How to pay nonfamily managers in large family firms: A principal—agent
model. Family Business Review. 24(1). pp.9-27.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning.
43(2). pp.172-194.
Online
BUSINESS INNOVATION.2017. [online]. Available through :
<https://www.kbmanage.com/concept/business-innovation>.
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