Principles of Business Report: Market, Innovation, and Finance

This report comprehensively explores the principles of business, covering various aspects crucial for organizational success. It begins with an analysis of different business markets, outlining their characteristics and the nature of interactions between businesses, including the shaping of organizational goals by market dynamics. The report then delves into business innovation, defining it and explaining the uses of innovation models, sources of support, and the product or service development process, along with associated benefits, risks, and implications. Further, the report examines financial viability, explaining its importance, the consequences of poor financial management, and key financial terminology. It also discusses the uses and management of budgets. Finally, the report explores marketing principles, sales processes, market research, the value of branding, and the relationship between sales and marketing, providing a well-rounded overview of essential business concepts.

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
2.1 Define business innovation...............................................................................................2
2.2 Explain the uses of models of business innovation..........................................................2
2.3 Identify sources of support and guidance for business innovation...................................2
2.4 Explain the process of product or service development...................................................3
2.5 Explain the benefits, risks and implications associated with innovation.........................3
TASK 3............................................................................................................................................3
3.1 Explain the importance of financial viability for an organisation....................................3
3.2 Explain the consequences of poor financial management................................................4
3.3 Explain different financial terminology...........................................................................4
TASK 4............................................................................................................................................4
4.1 Explain the uses of a budget.............................................................................................4
4.2 Explain how to manage a budget......................................................................................5
TASK 5............................................................................................................................................5
5.1 Explain the principals of marketing.................................................................................5
5.2 Explain a Sales process....................................................................................................5
5.3 Explain the features and uses of market research.............................................................5
5.4 Explain the value of a brand to an organisation...............................................................6
5.5 Explain the relationship between sales and marketing.....................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Principles of business are those rules and regulations that is used to run any organisation.
The world of business is an extremely large place and there are plenty of ways to run a success
company and make a profit if you understand the market (Block, 2011). The present report is
explaining characteristics of different business markets.
TASK 1
1.1 Characteristics of different business markets
They’re many different types of customer you can sell your products too but the main
business markets can be broken down into these 5 categories:
 Business to business market
 Industrial market
 professional services and Financial services
 Government
 High Street
The business to business market is when one business simply sells it’s products to
another meanwhile the industrial market consists of companies transacting business in hard
goods such as machinery, materials, vehicles and supplies (Zott, Amit and Massa, 2011).
Professional services include the delivery of business needs such as marketing, information
technology, management consulting and payroll whereas financial services include banking,
insurance, commercial credit and lending, and even sometimes tax planning.
1.2 Nature of interactions between businesses within in 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.
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1.3 How an organisation’s goals may be shaped by the market in which it 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 (Teece, 2010). 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 Describe 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.
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 (Li and Sun, 2011). Finally if you’re leasing
a property it’s important to stick to the Retail Shop Leases Act 1994.
2.1 Define business innovation
The simplest way to describe innovation in business is a new creative idea that is
designed to help improve your business. Whether that be to improve the working lives of your
staff, improve your profits or improve your products it’s something that will have a positive
impact on your company.
2.2 Explain the uses of models of business innovation
Models of business innovation can help you identify opportunities to grow your business,
generate new creative ideas, find and successfully enter into new emerging markets and create
new systems and rules that will take your business forward.
2.3 Identify sources of support and guidance for business innovation
The government are constantly focused on improving business in the UK and offer help
to those businesses who’re in need. Here you can get support to get improve and grow your
business through ways of business innovation. Often local authorities also offer businesses help
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to get going. Barnsley council offer a business start up plan which helps local people set up their
own innovative businesses.
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
There are many benefits to innovation but there are also many risks. The benefits can
include increasing your profits, helping to personalise your services, finding new business
opportunities or even giving you an advantage over your competitors. 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 (Olawale and
Garwe, 2010). 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
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.
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3.2 Explain the 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
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.
That’s why it’s vital to carefully think about every decision you make in business.
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 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 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
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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.
TASK 5
5.1 Explain the principals of marketing
Marketing involves a range of processes that are used to find out what customers want,
these are known as the 4ps. They stand for Price Product Production and Place. These are the 4
main principals of marketing and one you find out it will help you market your product
successfully.
5.2 Explain a 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.
5.3 Explain the 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 (Muller, 2013). 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 Explain the value of a brand to an organisation
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.
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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. 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.
5.5 Explain the relationship between sales and marketing
Marketing helps generate sales leads then it’s the job of a sales team to execute the deal.
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 (Sekaran and Bougie, 2016).
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.
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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.
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