Introduction to Business Administration Study Guide

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Introduction to Business Administration Slide 11

Introduction to Business Administration

Session 11 –Role of government in business

1. History and development of Ghana government’s involvement with business
Shift from Socialist to Free market Economy.
The dynamics of world affairs and of the economic growth of Ghana.
The emergence of multinational companies and large enterprises.
The political conviction that government should be a representative of the people

2. Why Government regulates

This emanates from the conviction that there must be rules for business, otherwise, disorder and unfairness would prevail.

3. How Government regulates the Business Sector

• The promotion of business competition by permitting entry into any of a wide range of business pursuits. e.g. Protection Against Unfair Competition Act 2000 (Act 589).
• Regulating and Deregulating Industries.
• OECD 1995 defines regulation as legal instruments by which governing institutions at all levels of government impose obligations or constraints on private sector behaviour.
• Protecting stakeholders
• (i) Bank of Ghana Act provides for its role as regulator of the banking industry.
• (ii) Public Utilities Regulation Commission 1999 LI 1651

Some government regulating agencies

Government Agency                        Major areas of responsibility

•Environmental Protection Agency    Develops and sets standards to protect the environment.
•Federal Highway Authority        Regulates vehicle safety requirements.
•Food and Drug Board            Enforces laws and regulations to prevent distribution of harmful foods, drugs, medical devices and cosmetics

• The provision of adequate public facilities to business in order to insure healthy and expanding business activity.
• Contributing to economic stability.

Should government actively operate a business enterprise?

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Introduction to Business Administration Slide 10

Introduction to Business Administration

Session 10 –Managing human resource

1. The Staffing Plan
Setting the objectives
(a) Number of staff
(b) Job Descriptions
(i) The job title
(ii) Job identification
(iii) Job duties
(iv) Job specifications

Job Requirements

A Position Description for a corporate Loan Assistant
POSITION DESCRIPTION
FUNCTIONAL TITLE: Corporate Loan Assistant DEPARTMENT: Corporate Bank
JOB DUTIES: ASSIST LOAN OFFICER
PROVIDE LOANS
LOCATION: Head Office
DATE: June 15, 2009
JOB SPECIFICATIONS: LIASE WITH CUSTOMERS, RECEIVE CASH & CHEQUES, PREPARE ACCOUNTS AND OTHER ASSIGNED RESPONSIBILITIES
RELATIONSHIPS:
Reports to : Corporate Account Officer A or AA; or Sr.
Corporate Account Officer B or BB
Subordinate Staff: None
Other Internal Contacts: Various levels of management within the corporate Banking Department
External Contacts: Major bank customers

2. Implementing the plan

Recruitment
(i) Advertisements
(ii) Educational institutions
(iii) Unsolicited applications
(iv) Organizations (Churches)

3. Interviewing 

• Establishing the objectives and scope of each interview
• Establishing and maintaining rapport
• Listening
• Giving information
• Separating facts from inferences
• Avoiding questionable approaches

4. Selection

• “Can do” and “Will do factors”
• Mutual expectations
• Value systems
• Decision strategy

(i) Clinical approach
(ii) Statistical Approach

5. Notification
Alerting or informing selected candidates

6. Orientation

•Provides new employees with an understanding of how job performance contributes to the success of the organization.
•It also provide new recruits with information on how the services and products of the organization can contribute to society.
•It is also used as an opportunity to educate new recruits on the background of the organization as well as future directions of the firm.


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Introduction to Business Administration Slide 9

Introduction to Business Administration

Session 9 –Managing financial resources

1. Working capital

Revenue- is used to pay the costs incurred in making money at present.
Capital - money invested to ensure the business operates into the future.

Capital- calculated from figures in the balance sheet.
Working Capital- Current assets minus Current liabilities

2. Various Types Of Finance

Equity - Capital invested in the business by owner/s

Debt finance - a loan to the business.

3. Differences between equity and debt financing

Equity financing (Advantages)

Equity finance acquired externally is an investment of capital in the business.
It does not usually need to be paid.

Equity finance (Disadvantages)

•Share of profits must be distributed to investors.
•When acquired externally, level of control might be reduced due to other stakeholders.
•When provided by the owner, it limits availability of funds for other uses.

Debt financing (Disadvantages)

•Must be paid within a specified time.
•If payments are not made on time you may lose your business.

Debt financing (Advantages)

•Have use of additional sources.
•Retain full control of your business.

4. Researching your potential funders

a. Do they fund businesses in my industry?
b. At what stage of business development do they provide funding?
c. What are the minimum and maximum amounts of funding they consider?
d. What are the minimum and maximum sizes of the business they consider funding?
e. On what basis do they generally consider funding: equity or debt?
f. What other companies in my industry have they funded previously?
g. What kinds of information would they require me to submit with my plan?
h. What is the funder’s reputation in the industry?

5. Sources of finance
•Issues to be considered before attempting to gain external finance;



a. Existing enterprises
Funds can often be made available from within existing businesses. These funds might be sufficient to meet all immediate needs. Even if they are inadequate, they would reduce the amount to be found
externally thus increasing the probability of obtaining them. Sources of such funds include;

Fixed Assets

•Fixed assets such as vehicles, equipment, fittings and property could be reviewed. They are often a source of cash in that it might be possible to sell off little used assets and hire suitable replacements as required.

Suppliers

•Extended payments terms for your purchases or materials give you the opportunity to obtain funds from the sale of your products and to use these funds to pay your suppliers.

b. Existing and start-ups

•The entrepreneur must carefully consider borrowing additional finance particularly if the business is starting up for the first time. Different institutions will offer different interest rates, terms of payment and require different levels of security. Such resources include;

Merchant Banks
These banks are active in providing large loans to medium to large scale businesses for two to five year periods and are therefore seldom suitable lenders to small businesses. However, if a small business has a viable project that requires large scale financing these banks would be worth approaching.

Mainstream Commercial Banks
Although these banks can be approached for finance, it is often the case that the minimum loan they offer is in excess of what is required by most small enterprises. Furthermore, they charge high interest rates which most small businesses would struggle to pay.

Rural banks
Most rural offer some form of credit assistance to small enterprises through micro-lending.

Micro-lending as practiced by rural banks is a new branch of poverty-focused ‘development in practice’. Consequently, unlike the mainstream banking institutions, rural banks have developed non-traditional banking methods that appeal to small enterprises.

Micro, Small & Medium Enterprises Project
This institution provides financial assistance and technical support to small-scale enterprises.

Venture Capital Fund
This institution oversees four venture capital operators that assists the development of small-scale enterprises

Leasing companies
Provide access to assets without the need for a large capital outlay.

Export Development Investment Fund
Offers credit assistance to exporters
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Introduction to Business Administration Slide 8

Introduction to Business Administration

Session 8 – Managing a small business

What is Management?

•Initiate and coordinate the use of all available resources efficiently.
• effectively to enable the enterprise achieve its goals.

1. Planning
Definition:
•Planning involves setting goals and objectives and then deciding what needs to be done to achieve them.

Reasons for planning

•To improve your ability and performance as a manager.
•To reduce the probability of mistakes.
•To help create blueprints for managing growth and change.
•To help you achieve a growth rate that is neither too fast nor slow.
•To enable you measure and compare your operating results performance standards.

Types of planning

a. Long range
b. Short range
**Make time for planning

**Employee participation in planning
a. Delegate
b. Solicit employees’ ideas

2. Organizing

Definition:
•The process of arranging resources to carry out the organization’s plans.

Structuring a Business involves:

a. Dividing its work in a logical way.
b. Deciding how best to coordinate the many work activities that need performing. This requires deciding:

•What tasks need to be carried out
•How those tasks should be grouped into jobs
•How best to group those jobs to form larger groups of jobs

3. Leadership

•Definition The process of influencing (or controlling) employees to direct their efforts towards achieving a common goal.

Leadership styles
a. The autocratic style
Centralizes authority and does not involve others in decision-making.

b. The democratic style
Delegates authority, involves employees in decision-making, and encourages employee participation and a free flow of communication. However, the leader makes it clear all along, he/she has the final say.

c. The laissez-faire style
Leads by taking the role of a consultant, providing encouragement for employees’ ideas, and offering insights and opinions when asked.

d. Participative Management
A company that has a regular system for involving its employees in decision-making.

4. Controlling

The process of monitoring progress toward organizational objectives, resetting the course if objectives change, and correcting deviations if objectives are not being attained.

Types of control

a. Preliminary Control
b. Concurrent Control
c. Feedback Control

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Introduction to Business Administration Slide 7

Introduction to Business Administration

Session 7 –Bringing innovation into the business setting

1. Characteristics of a creative business environment
 
a) Freedom
•The ability or opportunity to exercise some freedom in the business environment is critical to the creative process.
•The option for creativity grows not so much from freedom in what we do, but how we do our work.

b)Encouragement
Management must provide encouragement for the development and exploration of ideas. A status quo mentality, or an inability to accept new ideas, will not promote an imaginative culture.

c)Recognition
Rewards or salary structures in which employees progress in orderly increments over a long period of time may generate loyalty rather than achievement.
The challenge for businesses is to provide a range of measures and rewards such as peer recognition, different work opportunities, a better working environment and access to equipment.


d) Desire to achieve a creative culture
- Must understand imagination and how it works.
- Should ensure there are no non-examinable rules.
- Offer opportunities for growth.

2. Building innovative capability

a) Ensuring the commitment of the leadership team
The key to building an innovative business organization is firstly to ensure the constant commitment of top management. Top management must ensure it is willing to be committed to the goal of becoming an innovative business unit.

b)Ensuring adequate management capability
It is important that the managerial leadership has enough horsepower to get the work done.

c) Identifying key skill gaps
Taking the time to understand and identify the gaps and how they can be filled is an essential part of top management’s role.

Barriers to Innovation

a) Underestimating what is required
It is not unusual for top management to underestimate the extent of the change needed to become an innovative enterprise and the adequacy of capabilities to achieve the task.

b)The organizational web
Businesses need to exhibit flexibility and adaptability in order to compete effectively.

c)Identifying strands
• What is it that makes someone come to work?
• What is it that really excites and motivates the workers?

d) Fear of failure
One of the most significant reason why creativity is unrecognized is the fear of failure or the fear of an idea not living up to the complete promise.

e) Inadequate resources for the change process
Many businesses struggle to access resources. Moreover, good help rarely comes cheaply.


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Introduction to Business Administration Slide 6

Introduction to Business Administration

Session 6 – The Nature, Significance and Sources of Innovation

What is Innovation?

•Drucker (1986) defines innovation as “the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth”.

•La Salle (2002) Change that adds value…the key to success in product creation.

• Australian Institute of Management (2001) Something new or significantly different in a business that creates value directly to the business or indirectly through its customers.

When you think of innovation what comes to mind? Science or Technology?

•Actually innovation is not necessarily based on science or technology.
• Innovation can be social. Social innovation such as schools, universities, banks, hospitals and public service are far more difficult to achieve than building cars and trains.

2. Misconceptions of Innovation
a. Innovation is invention
Although innovation is linked to invention, they are not necessarily the same. An invention is a creative idea, while innovation takes that idea, and puts it to work.

b. Innovation represents new products and services only:
Innovation may result in new products or services, however, it is not solely confined to their development. It embraces new developments in other fields including;

(i) New Markets:
It is innovative to take existing products or services and sell them into new markets.
(ii) New Marketing methods:
The product or service can remain the same and the market does not change; the key to innovation may then come from the marketing of the product to the customer.

c) Innovation has to be original
•Innovation does not take place in a vacuum.
New ideas always have roots in the old; they start with what already exist, and become original from the unique way in which they combined or connected to existing ideas and knowledge.

Sources of Innovation

a) The unexpected A common indicator of underlying change is the unexpected result, either success or failure. Unexpected success, or failure, often gives clues to underlying trends which can lead to innovation.
(i)Unexpected Success
(ii) Unexpected failure

b. Process need
The importance of need as a source of innovation is captured in the proverb: ‘Necessity is the mother of invention’.

c) Industry and market structures
•Industry and market structures can change rapidly, sometimes after a long period of stability.
•Such changes offer exceptional opportunities to innovations.

d) Demographics
• Changes to the environment of an enterprise inevitably contain many possibilities for innovation, but are often hard to see, or understand, until they are past and the opportunities missed.

e) Changes in perception
The facts may not change, however, peoples perception of the facts change, which has an equally powerful effect.

f) New knowledge
The most famous innovations are often based on new knowledge.
•Demographic changes, however, are clear and unambiguous, and signalled well in advance.

Characteristics of imaginative people

i. Self-motivated
ii. Have expertise in chosen field.
iii. Are risk takers.
iv. Possess social skills.


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Introduction to Business Administration Slide 5

Introduction to Business Administration

Session 5 – Identifying and assessing the business opportunity

1. What is a Business Opportunity?

•An attractive idea or proposition that provides the possibility of a return for the investor or the person taking the risk.
•Such opportunities are presented by customer requirements and lead to the provision of a product or service which creates or adds value for its buyer or end-user.

2. Characteristics of a good business opportunity

For a business opportunity to be good it must fulfill, or be capable of meeting the following criteria:
•Real demand – respond to unsatisfied needs or requirements of customers who have the ability to purchase and who are willing to exercise that choice.
•Return on investment - provide durable, timely and acceptable returns or rewards for the risk and effort required.
•Competitive- be equal to or better (from the viewpoint of the customer) than other available products or services.
•Meet Objectives - meet the goals and aspirations of the person or organization taking the risk.
•Available resources and skills - be within the reach of the entrepreneur in terms of resource, competency and legal requirements.

3. Identifying and assessing Business opportunities
• Ideas and opportunities must be screened and assessed for viability once they have been identified or generated. It can make the difference between success and failure.
• Identifying and assessing business opportunities involves, in essence, determining risks and rewards reflecting the following factors:

•Industry and market – Is there a market for the idea? Are there any customers – people with money who are able and willing to buy the product or service?
•Length of the ‘window of opportunity’. Can you create or seize the opportunity whilst it lasts?

•Management team – Who else will be involved with you in the business? Do they have the experience, know how or other desirable attributes required?
•Competition – Who are the competitors? Do you have something desirable by customers that they do not have?
•Capital, technology and other resource requirements – How much capital, or for that matter technology or other resources are required? Do you have them or could you get them?

4. Sources of Business ideas

Hobbies/Interests – A hobby is a favorite leisure-time activity or occupation.
Mass media – is a great source of information, ideas and often opportunity.
Personal Skills and Experience – Over half of the idea for successful businesses come from workplace experiences.

•Exhibitions – Another way to find ideas for a business is to attend exhibitions and trade fairs.
•Surveys - The needs and wants of the customer, which provides the rationale for a product or service, can be ascertained through a survey.
•Complaints – Complaints and frustrations on the part of customers have led to many a new product or service.
•Brainstorming – It usually starts with a question or a problem statement. For instance, what are the products/services needed in the home today, which are not available?
 


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Introduction to Business Administration Slide 4

Introduction to Business Administration

Session 4 – Different forms of business ownership

1. Choosing a form of Business ownership
•The decision can be complex and have far reaching consequences for owners, employees and customers.
•Selecting the right ownership involves knowing your long-term goals and how you plan to achieve them.
•Your choice also depends on your desire for ownership and your tolerance for risk.

2. Sole Proprietorship
•The simplest form of business entity is the sole proprietorship.
•If you operate as a sole proprietor, you and your business are legally inseparable.
•You can continue to operate as a sole proprietor as long as you are the only owner of the business.

Advantages

•Registration is inexpensive, simple and uncomplicated. There is no need to draft a partnership agreement or to go to the extent of filling different registration forms at the Registrar-General’s Dept.
•You are unlikely to be sued;
•You may not need to start with much money;
• It may be considered the most appropriate form of business entity to start with.
•The satisfaction of working for yourself.
•You keep all the after tax profits.
•You don’t to reveal your plans or finances to anyone.

Disadvantages

•The owner is personally responsible for all debts.
•Sole proprietor is only possible when the business is owned by one person.
•A sole proprietor and business are considered to be the same legal entity for tax purposes.
•The business depends on the managerial skills of one person.
•The life of a sole proprietorship is limited.
•The difficulty of a single-person operation obtaining large loans.

3. Partnership
An association of two or more individuals, carrying on business jointly for the purpose of making profits. The incorporated Private Partnership Act, 1962, Act 152, governs this type of partnership.

Advantages
•Partnership dwells on pooling resources together. The right business partnership creates an arena for complimenting skills, knowledge and finance.
•The broad pool of talents tends to translate into innovative products and services.
•Partnership increases the chances that the business will endure.

Disadvantages

•A partner can be held responsible for another partner’s negligence.
•It has the potential for interpersonal problems.

4. Limited Liability
• A limited liability is a company having the liability of its members limited to the amount, if any, unpaid on the shares respectively held by them.

Advantages
•Individual members will not be personally liable for debts or other obligations of the company.
•The company can raise more capital by issuing more shares or debentures.
•It has greater borrowing power.
•Board of directors with expertise/experience can be appointed.
•Shareholders can sell/transfer their shares freely.

Disadvantages
•There is a loss of overall ownership.
•There is a loss of control of the business.
•Decisions take longer and there may be disagreement.
•Significant expenses are incurred when setting up the company.
•The personal touch may be lost.
•There are more statutory regulations to conform to.
•Profits are shared among greater number of people.
•Public disclosure of the financial affairs is necessary.

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Introduction to Business Administration Slide 3

Introduction to Business Administration

Session 3 – Business environment: doing business right

1. Ethics and social responsibility in Business

Ethics: Defined as the principles and standards of moral behavior that are accepted by society as right versus wrong.

What is Ethical Behaviour?
•Competing fairly and honestly.
•Communicating Truthfully.
•Not causing harm to others.

How to make Ethical decisions
•Is the decision legal? (Does it break any law?)
•Is it balanced? (Is it fair to all concerned?)
•Can you live with it? (Does it make you feel good about yourself))
•Is it feasible? (Will it actually work in the real world?)

Ethical situations can be classified into two general types:

• An ethical dilemma: A situation in which a person must choose between two conflicting but arguably valid sides.
• Ethical lapse: When a person makes a decision that is clearly wrong

2. Perspectives on Social responsibility

•Social responsibility: Is the idea that business has certain obligations to society beyond the pursuit of profits.
•Conflicts over social responsibility are often fueled by different perspectives that can be grouped into three categories.

•The traditional perspective: Business is making money.
•The contemporary perspective: Ethics pays.
•An emerging perspective: dynamically balancing ethics and profits.

3. Emerging Issues from the Ethics/Social Responsibility Debate

a. Responsibility toward investors
Given the scandals of recent years, many investors are concerned about the ethics of the company in which they invest.

b. Responsibility towards Consumers
•The right to safe products.
•The right to be informed.
•The right to be heard.

c. Responsibility toward employees
- The Push for equality in employment.
- Occupational health and safety.

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Introduction to Business Administration Slide 2

Introduction to Business Administration

Session 2 – Definitions and Concepts

Session overview
•The course provides a basic understanding of the concepts and definitions of business.
•It gives a general understanding of the management issues in business as well as the types of business one can proceed into.

What is Business?

•A business is an organized, profit-seeking activity that provides goods and services designed to satisfy customers’ needs (Bovee, Thill and Mescon 2010).
•A business is any organization that strives for profits by providing goods and services that meet customer needs (Fry, Stoner and Hattwick 1998).

The objective of Business

•To make a profit.
•Business is a way of life.
•Business provides opportunities for gaining other forms of satisfaction.


Historical development of Business in Ghana
•Business in Pre-colonial Ghana.
•Business in Post-colonial Ghana
•Business in Modern Ghana

Goods Producing Businesses vrs. Service Businesses

Characteristics of Goods Producing Businesses
•Goods producing businesses produce tangible goods by engaging in activities such as manufacturing, construction, mining and agriculture.
•It is difficult to start a goods-producing business without substantial investment in building, machinery and equipment.
•Goods-producing businesses are capital-intensive

Service

•A service is defined as an intangible product, performance of which mainly requires human effort or work.
•Examples include, banking, health care and restaurants.

Characteristic of Services

•Services are intangible.
•Service performance (delivery) and consumption are inseparable.
•Services are perishable
•Performing services is highly labor-intensive.
•Services tend to be heterogeneous.
•Services are performed rather than produced.

The Economic and Social roles of Businesses

•It is impossible to evaluate the overall contributions and importance of businesses. The simple reason for this being that their contributions vary. Some contributions that stand out though include;

•They provide jobs
•They introduce new products
•They inject a considerable of money into the economy
•They add greatly to the rich variety of goods and services available to consumers
•Contribute to society’s values and stability
•Are a rich source of new ideas and innovations in products and services,



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Introduction to Business Administration Slide 1

Introduction to Business Administration

 

Session 1 – Overview of sessions

Course Overview
•This course provides the various definitions of business and concepts underlining the management of business.
•It would include discussion on some of the characteristics of businesses, the types of business, type of business ownership just to mention a few.
•The course would also consider the role of government in regulating and promoting business in Ghana to be specific.

Course Outline
The key topics to be covered in the session are as follows:
•Definitions and concepts of business.
•The business environment: doing business right
•Different forms of business ownership.
•Identifying and assessing the business opportunity.
•The nature, significance and sources of innovation.
•Managing the small business.
•Bringing innovation to the business setting etc

Reading List
Reading materials:
•Introduction of Business Administration Distance Education Manual- Dr Daniel Quaye.

DEFINITION AND CONCEPTS OF BUSINESS

Topic overview
This section introduces you to definitions of the concept of business. It provides you with various definitions of business and identifies the characteristics of businesses.

Topic two
Business Environment: doing business right

Topic overview
•This session explains what it means to conduct business in an ethically and socially responsible manner and discusses the importance of doing so.
• It explores the factors that influence ethical behavior and learn ways to make ethical decisions to ensure business treat society, the natural environment, their customers, their investors, their employees, and each other fairly.

Topic three
Different forms of business ownership

This session discusses the important decision of selecting the type of business organization a firm will be. The three main choices in Ghana are Sole Proprietorships, Partnership, and Limited Liability Company (LLC).

Topic four
Identifying and assessing the business opportunity

•This session focuses on Identifying, seeking and acting on opportunities, which is what every successful entrepreneur does.
•These activities are the basis for starting and recognizing opportunities; screening and evaluating them to determine the most viable, attractive propositions to be pursued.


Topic five
The nature, significance and sources of innovation

Topic overview
•The defining challenge for competitiveness has shifted, especially in advanced countries.
•Today, continued operational improvement is given, and companies in many countries are able to acquire and deploy the best current technology.
•This session examines the nature, significance and sources of innovation.

Topic six
Bringing innovation into a business setting

Topic overview
•This session seeks to discuss the characteristics of a creative business environment as well as reveal how a firm or management can build the innovative capabilities of their employees.
• In addition, the session will also emphasize the barriers of innovation within the business environment.


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