The Institute of Chartered Accountants of Bangladesh

Business Technology and Finance

Chapter-01
Introduction to Business

Presented By: Muhammad Mahbub Alam FCA

08th October,2024
 Learning Objectives

After the session the students will be able to

 identify the meaning of Organization and its types

 identify the reasons why businesses exist
 identify the key features of businesses as distinct from other forms of
organization
 identify the meaning of Business and its objectives
 identify who the stakeholders are in an individual business
 understand the business’s vision, mission, goals ,plans and standards
 identify how a business measures whether its objectives have been met
 identify the nature and functions of organizational management, human
resources management and operations management
 able to know The Business Model and also enhance knowledge on different
Business Model in Bangladesh
 What is an organization

Introduction to Business

What is a Stakeholders in Objectives of Business

business business business Performance

Mission, Goals, Plans

and Standards
Organization: A social arrangement for the controlled performance of
collective goals which has a boundary separating it from its environment.

There are many different types of organization in both the not-for-profit and business sectors.
Here are some examples of organizations, categorized as to whether they are profit-oriented or
not-for-profit.
 A multinational car manufacturer (e.g. Ford)
 An accountancy firm (e.g. KPMG)
 A charity (e.g. UNICEF)
 A trade union
 A local authority
 An army
 A club
Why do organization Exist?
 Overcome people's individual limitations, whether physical or intellectual
 Enable people to specialize in what they do best
 Save time, because people can work together or do two aspects of a different task at the
same time
 Accumulate and share knowledge (e.g. about how best to build cars)
 Enable people to pool their expertise
 Enable synergy: the combined output of two or more individuals working together exceeds
their individual output ('None of us is as smart as all of us').
In brief, organizations enable people to be more productive.
 How do organizations differ?

Factors Example
Private sector: owned by private investors/shareholders
Ownership (public vs private) Public Sector: Owned by the nation and managed by the
government

Control By the owners themselves, by people working on their behalf, or

indirectly by government-sponsored regulators

Activity (i.e. what they do) Manufacturing, healthcare, services (and so on)

Profit or non-profit orientation Business exists to make a profit. An army or a charity, on the other

Size Small local business to multinational corporation

Legal status Company, or an unincorporated body such as a club, association,

Sources of finance Borrowing, government funding, share issues

Technology High use of technology (e.g. computer firms) v low use (e.g. corner
shop)
 Differences in what organizations do ?

Industry Activity
Agriculture Producing and processing food

Manufacturing Acquiring raw materials and, by the application of labour and technology,
turning them into a product (e.g. a car)

Extractive/raw Extracting and refining raw materials (e.g. mining)

materials
Energy Converting one resource (e.g. coal) into another (e.g. electricity)

Retailing/distribution Delivering goods to the end consumer

Intellectual production Producing intellectual property e.g. software, publishing, films, music etc

Service industries These include banking, various business services (e.g. accountancy,
advertising) and public services such as education and medicine
 Business: A business is an organization which aims to maximize its owner’s
wealth and it can be regarded as an entity separate from its owner.

 A business is defined as an organization or enterprising entity engaged in

commercial, industrial, or professional activities.

 The term business also refers to the organized efforts and activities of individuals to
produce and sell goods and services for profit. Businesses range in scale from a
sole proprietorship to an international corporation.

 Business’s Objective: Every business has a hierarchy of objectives :

Primary Objective: Secondary Objective:

Making as much profit as possible Market Position,
(Profit Maximization) so as to Product Development,
increase shareholder wealth. Technology,
Employee and Management.
 Stake Holder: A stakeholder is a person who has some kind of interest or stake in the
business.
Primary Stake Holders : Share holders/Partners/Proprietors

Secondary Stakeholders : Directors, Managers, Employee, Trade

Union, Customers, Suppliers, and others BP(Business Partner) , Lenders, Government
and its agencies, The local community, The public at large and The natural environment.
 Constraints Theory: Simon has pointed out that for some business areas decisions are
taken without reference to the wealth objective at all. This is not because they are ignoring
profit, but because profit is not the most important constraint in their business.
 This is perhaps seen most clearly in areas where ethical constraints apply, such as staff
relations or environmental protection. It may also be seen in the need to satisfy customers with
quality products and service – which may lower profitability.

 Profit: Is revenue less costs. It measures the creation of value, in terms of the relationship of
inputs to outputs. Profit thus integrates cost behavior and revenue performance for the whole
organization.

 Social responsibility the business must take into account:

 Impact on natural environment

 Human resource management policy
 Adverse political connotations
 Charitable support
 Above minimum standard
 Vision

Mission

Goals

Non-operational Operational
/Qualitative Goals /Quantitative Goals

Aims Objectives

SMART
 Vision
A vision is a vivid mental image of what you want your business to be at
some point in the future, based on your goals and aspirations. Having
a vision will give your business a clear focus, and can stop you heading
in the wrong direction.

Vision Statement is a statement of what is possible, the picture of the future

you want to create.
 Vision
Google's corporate vision is “to provide access to the world's
information in one click.”

Microsoft (at its founding): A computer on every desk and in

every home.
Facebook: Connect with friends and the world around you on
Facebook.
LinkedIn: Connect the world's professionals to make them
more productive and successful.

Amazon: Our vision is to be earth's most customer-centric

company; to build a place where people can come to find and
discover anything they might want to buy online.
Our Vision
 Mission
 Mission Statement will turn your vision into practice. A sentence
describing a company's function, markets and competitive advantages; a
short written statement of your business goals and philosophies.

 A mission statement defines what an organization is, why it exists, its

reason for being.

 ORGANIZATIONAL MISSION is the purpose for which

the Organization exists. The firms organizational mission reflects such
information as what types of products or services it produces, who its
customers tend to be, and what important values it holds.

 The elements of mission:

 Purpose : Why do organization exist and for whom

 Strategy : What and how we do it
 Policies and standards of behavior :
 Values : What the organization believes to be important
 Mission
Google: Our mission is to organize the world's information and make it
universally accessible and useful.

Microsoft :is technology company whose mission is to empower every

person and every organization on the planet to achieve more. We strive to
create local opportunity, growth, and impact in every country around the world.

Facebook:"bring the world closer together". Our full mission statement is:
give people the power to build community and bring the world closer together.

LinkedIn: mission statement is to “connect the world's professionals to make

them more productive and successful.”

Amazon: Our mission is to continually raise the bar of the customer experience
by using the internet and technology to help consumers find, discover and buy
anything, and empower businesses and content creators to maximize their
success. We aim to be Earth's most customer centric company.
Our Mission
 Goal
 Goals: The intentions behind decisions or actions or a desired end
result. Goals give flesh to the mission. Goals are two types:

o Non-Operational _Qualitative goals (Aims).

o Operational _ Quantitative goals (Objectives)

Operational goals (Objectives) should be SMART

Specific
Measurable
Achievable
Relevant
Time-bound
 The purpose of setting operational objectives in a business

 Implement the mission, by setting out what needs to be achieved

 Publicize the direction of the organization to managers and staff, so that
they know where their efforts should be directed.
 Appraise the validity of decisions (by assessing whether these are
sufficient to achieve the stated objectives).
 Assess and control actual performance, as objectives can be used as
targets for achievement.

Planning and Control System:

 Deciding what they want to do to achieve the overall objective ,such
as(Grow revenue by 20% or reduce cost by 10%)
 Deciding how , when and who is to do it (Setting plan and standard)
 Checking that they achieve what they wanted
 Taking control action to correct any deviation
 Health Checkup/ Measuring performance

 Profitability: Cost centers and profit centers. GP, NP, Markup,ROI, ROCE.

 Activity: Number of orders received, Times of Machine Breakdown.

 Productivity: Productivity is the quantity of goods or services produced in relation to the

resources put into the production. In fact it exhibits the input and output ratio.

Measuring Resource use

Efficient use of resources is concerned with the economy with which resources are
used, and the effectiveness of their use in achieving the objective of the business.

 Economy_ is optimization or containment of cost ; this can be measured against targets.

 Effectiveness_is the measures of achievement and is assessed by reference to

objectives.

 Efficiency_is achieving objectives at minimum cost without losing operational effectiveness.