8/14/2019 ITB Lectures

1/16

Intro. ToBusiness

What is a business ?

An organization that provides goodsand services to earn a profit

The activity of providing goods andservices to earn a profit

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Intro. ToBusiness

How does a business operate ?

Input Process Output

INPUT

Factors of Production

Natural Resources/ Land

Labour

Capital

Entrepreneur

Information Resources

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Intro. ToBusiness

How does a business operate ?

PROCESS

Operations of a business

Purchasing

Inventory

Production

Distribution

Marketing - Sales

Finance - Accounting

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Intro. ToBusiness

How does a business operate ?

OUTPUT

Realization of Profits

Demand Satisfaction / Need Fulfillment

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Intro. ToBusiness

How does a business operate ?

Natural Resources

Agricultural Land

Mining

Water Resources

Air Resources

Sunlight

Rain

..

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Intro. ToBusiness

How does a business operate ?

Labour

Physical

Intellectual

Also called Intellectual Capital

Q) Which Labour is paid highly bysociety?

Physical IntellectualPresentation

8/14/2019 ITB Lectures

7/16

Intro. ToBusiness

How does a business operate ?

Capital

The funds needed to create and operate a

business enterprise

Sources: Investments, Revenues, Assets

Forms: Funds, Assets, Equipment,Building,

Machinery

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8/16

Intro. ToBusiness

How does a business operate ?

OUTPUT

Realization of Profits

Demand Satisfaction / Need Fulfillment

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Intro. ToBusiness

How does a business operate ?

Entrepreneur

Individual or group of individuals who

start and operate a business

Knowledge, skills, technical expertise

Willingness to take a risk

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10/16

Intro. ToBusiness

How does a business operate ?

Information

Knowledge of what is required to start,operate, manage, grow, compete

Information Sources, InformationSystems

E.g Investments, Stock Market, NewProducts, New Markets, New Ideas

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11/16

Intro. ToBusiness

Where does a business operate ?

Economy

How does anEconomy work?

Economic System

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Intro. ToBusiness

Economic System

Three major Economic Systems

3. Socialist/Communist EconomicSystem

5. Market based Economic System

7. Islamic Economic System

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Intro. ToBusiness

Economic System

Based on three philosophies / Ideologies

3. Socialist/Communist Economic System

Socialism

Everything is owned by the people and allresources (factors of production) will beutilized to benefit all the citizens equally anddistributed equally as well

Communism

Everything is owned by the state and the statewill manage, distribute, utilize the resourcesfor the benefit of its citizens

SOCIAL WELFARE

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Intro. ToBusiness

Economic System

Three major Economic Systems

3. Market based Economic System

Capitalism

Individuals have complete freedomof ownership and they can own as

much as they want. Thegovernment will not intervene inmarkets whatsoever and thereare no restrictions on owningcapital

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Intro. ToBusiness

Economic System

No restrictions on Capital productionand ownership

All resources would be distributedthrough market mechanisms

Capital can produce as much capitalas desired

FREEDOM OF

OWNERSHIP

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Intro. ToBusiness

Economic System

3. Islamic Economic System

Basic Philosophy

Allah is the owner of everything (factors ofproduction) and whatever a person holds is aTrust which he/she is answerable for at the dayof judgement.

Caretaker (Rab ul maal)

All resources should be utilized for the benefit ofeveryone. System of Zakat, Ushr, Sadaqat, Baitul Maal (Central Deposition)

State/Community is responsible to provide basicsustenance to its citizens

People have freedom of ownership but with theunderstanding that it is a trust and they are