By: Akua
To begin with a business is an organization or enterprising entity that provides goods or services in exchange for money or other goods. A business as two main ways of thinking about what it should focus on.
1. Profit Maximization: According to a famous Economist called Milton Friedman, If a business doesn't make money, it dies. Businesses need money to survive. However critics point out that making money shouldn't be the sole purpose of a business. Profit Maximization has a chart that looks at the gap between Total Revenue and Total Cost. The goal is to find the exact proportion level.
2. Social Benefits and Corporate Social Responsibility: A business cannot survive in the long run if it ruins the society or environment around it. Business measures success by both its financial profits and its positive social impact.
Four Theories of How a Business Should Operate
Business as Property: The business belongs entirely to the owners. They can do whatever they want with it as long as they don't break the law or physically hurt people.
Contract Theory: A business is a team effort. The employees and managers are all working together toward a common goal, so they should all have a say.
Stakeholder Theory: Anyone affected by the business even outsiders, like neighbors affected by factory pollution should have a voice.
Creative Expansion Innovation: The main goal of a business is to constantly invent, grow, and create new things. Companies like Google focus heavily on this.
This section focused on how a business organizes itself so that everyone works together smoothly instead of running around in chaos. Instead of having every employee try to do everything, organized business breaks big jobs into tiny, manageable pieces.
KEYPOINTS
Division Of Labour: Splitting up a massive workload and assigning specific parts to different people or teams. Why these matters {EFFICIENCY} when experts focus on what they do best, the business waste less time, money and materials. Efficiency means getting the absolute best result with minimal waste.
Delegation: this is when a managers give lower-level employees the authority to make decisions and take responsibility for certain task. Delegation can improve an organisations flexibility to meet customer’s needs and help organisations adapt to competitive environment.
Departmentation: as a business grows, you can’t just have hundreds of individuals wandering around, you must group them into departments. It is the basis on which individuals are grouped into departments and departments into total organisations. Departmentalization has an approach which includes, functional, matrix, team and network.