INTRODUCTION TO

BUSINESS AND ACCOUNTS

 Introduction to Business and Accounts

• Introduction to Business
• Forms of Business Ownership
• Basics of Accounting
• Business Ethics and Social Responsibility
• Economic Systems and Business
• Entrepreneurship and Innovation
• Business Management and Leadership
• Business Environment Analysis
• SWOT Analysis
• Pestle Analysis
• Business Communication Skills
• Business Law and Regulations
• Business Environment Analysis

2
 Introduction to Business

• Business refers to the organized effort of individuals to produce and sell goods and services for
profit.

• Various types of businesses, including sole proprietorships, partnerships, corporations, and

LLCs, each with its own objectives such as maximizing profit, growth, or social impact.

• Purpose of Business: Besides profit generation, businesses serve various purposes, including
meeting societal needs, creating employment opportunities, fostering innovation, and
contributing to economic development.

• Role in Society: Businesses play a crucial role in society by providing goods and services that fulfill
people's needs and wants, generating income and tax revenue, supporting community
development through philanthropy and job creation, and driving innovation and technological
advancement.

3
 Introduction to Business

• Types of Businesses:
• Sole Proprietorship: Owned and operated by a single
individual, offering simplicity and full control but with
unlimited personal liability.

• Partnership: Formed by two or more individuals sharing

ownership and management responsibilities, with shared
profits and liabilities.

• Corporation: A legal entity separate from its owners,

offering limited liability protection for shareholders but
subject to complex regulatory requirements and double
taxation.
4
Forms of Business Ownership

5
 Forms of Business Ownership

Sole Proprietorship
• The business is owned by one person.
• The least regulated form of organization.
• Owner keeps all the profits but assumes unlimited liability for the business’s
debts.
• Life of the business is limited to the owner’s life span.
• Amount of equity raised is limited to owner’s personal wealth

6
 Forms of Business Ownership

Partnership
• The business is formed by two or more owners.
• All partners share in profits and losses of the business and have
unlimited liability for debts.
• Easy and inexpensive form of organization.
• Partnership dissolves if one partner sells out or dies.
• Amount of equity raised is limited to the combined personal wealth of
the partners.
• Income is taxed as personal income to partners

7
 Forms of Business Ownership

Company
• A business created as a distinct legal entity composed of one of more individuals
or entities.
• Most complex and expensive form of organization.
• Shareholders and management are usually separated.
• Ownership can be readily transferred.
• Both equity and debt finance are easier to raise.
• Life of a company is not limited.
• Owners (shareholders) have limited liability

8
 Basics of Accounting

• Accounting involves the recording, analyzing, and reporting of financial transactions of a business. It is essential for
decision-making, financial management, and ensuring compliance with regulations. The basic principles of accounting
include the double-entry system, which states that every transaction has equal and opposite effects on at least two
accounts, and the matching principle, which requires expenses to be matched with the revenues they generate.
• Importance: Accounting provides crucial information for decision-making, financial management, and regulatory
compliance. It helps businesses track their financial performance, assess profitability, manage cash flow, and comply
with tax regulations.
• Double-Entry System: Every transaction affects at least two accounts, with equal and opposite debits and credits,
ensuring the balance of the accounting equation (Assets = Liabilities + Equity).
• Matching Principle: Requires expenses to be recorded in the same period as the revenues they generate, ensuring
accurate determination of profitability and adherence to the accrual basis of accounting.

9
 Business Ethics and Social Responsibility

• Ethics in business refers to the moral principles and values that guide decision-
making and behavior.
• Ethics in Business: Refers to moral principles and values that guide decision-
making and behavior in business interactions. Ethical behavior is essential for
building trust, maintaining reputation, and fostering long-term relationships with
stakeholders.
• Social Responsibility: Involves businesses taking actions that benefit society
beyond their financial interests, such as environmental sustainability, community
engagement, ethical labor practices, and philanthropy.
• Importance: Ethical behavior and social responsibility contribute to brand
differentiation, customer loyalty, employee engagement, investor confidence,
and long-term business sustainability.

10
 Economic Systems and Business

• Economic systems such as capitalism, socialism, and mixed economy shape the environment in which businesses
operate. Capitalism emphasizes private ownership and free market competition, socialism emphasizes collective ownership
and government intervention, while mixed economy combines elements of both. These systems influence factors such as
regulation, taxation, and market dynamics, impacting businesses' strategies and operations.
• Capitalism: Emphasizes private ownership of resources and free market competition, with prices determined by
supply and demand. Businesses operate with minimal government intervention, allowing for entrepreneurship,
innovation, and profit maximization.
• Socialism: Advocates collective ownership of resources and central planning by the government, aiming for
equitable distribution of wealth and resources. Businesses may be state-owned or subject to government regulation and
control.
• Mixed Economy: Combines elements of capitalism and socialism, with both private and public ownership of
resources and government intervention to address market failures, regulate industries, and promote social welfare.

11
 Entrepreneurship and Innovation

• Entrepreneurship involves identifying opportunities, taking risks, and creating value through innovation. Innovation
is essential for business success as it drives differentiation, efficiency, and growth. Entrepreneurs play a crucial role in
driving economic growth by introducing new products, services, and business models.
• Entrepreneurship: Involves identifying opportunities, taking risks, and creating value by starting new ventures or
introducing innovative solutions to existing problems. Entrepreneurs demonstrate traits such as creativity, resilience,
adaptability, and a willingness to embrace uncertainty.
• Innovation: The process of developing and implementing new ideas, products, services, or business models that offer
unique solutions to customer needs or market demands. Innovation drives competitiveness, growth, and sustainability by
fostering differentiation, efficiency, and adaptation to change.
• Importance: Entrepreneurship and innovation are vital for business success and economic growth, as they drive job
creation, productivity improvements, technological advancement, and the development of new markets and industries.

12
 Business Management and Leadership

• Management involves planning, organizing, leading, and controlling resources to achieve organizational goals.
Effective leadership is essential for inspiring and motivating employees, fostering innovation, and navigating change.
Different leadership styles, such as autocratic, democratic, and transformational, can impact organizational culture and
performance.
• Principles of Management: Include planning (setting goals and devising strategies), organizing (allocating resources and
designing structures), leading (motivating and guiding employees), and controlling (monitoring performance and
implementing corrective actions) to achieve organizational objectives.

• Leadership Styles: Range from autocratic (authoritarian decision-making) to democratic (participatory decision-making)
and transformational (inspiring and empowering followers). Effective leadership involves adapting styles to situations, building trust,
fostering collaboration, and motivating teams to achieve common goals.

• Role of Effective Leadership: Leaders set the vision, values, and direction for the organization, inspire and empower
employees, foster innovation and change, resolve conflicts, and create a positive organizational culture conducive to high
performance and employee engagement.

13
 Business Communication Skills

• Communication skills are essential for conveying information, building relationships, and resolving
conflicts in business. Importance: Effective communication is essential for transmitting information, building
relationships, resolving conflicts, and achieving common goals in business contexts. It enhances productivity,
reduces misunderstandings, fosters collaboration, and strengthens organizational culture.

• Forms of Business Communication:

• Verbal Communication: Involves spoken or written words to convey messages, instructions, or feedback through face-to-face
conversations, phone calls, meetings, presentations, or emails.

• Written Communication: Includes written documents, reports, memos, letters, emails, or business proposals that provide formal
records of information, decisions, or agreements.

• Non-verbal Communication: Involves body language, gestures, facial expressions, tone of voice, or visual cues that convey
emotions, attitudes, or intentions in addition to verbal messages.

14
 Business Law and Regulations

• Understanding key legal concepts such as contracts, torts, and intellectual property rights is crucial for
businesses to operate legally and protect their interests. Compliance with laws and regulations helps businesses
avoid legal liabilities and maintain ethical standards.
• Key Legal Concepts:
• Contracts: Agreements between parties that create legally enforceable rights and obligations. Contracts must meet
certain legal requirements, including offer, acceptance, consideration, legality, capacity, and mutual consent.
• Torts: Civil wrongs that cause harm or injury to individuals or property, leading to legal liability. Examples include
negligence, defamation, trespass, and fraud.
• Intellectual Property: Legal rights protecting creations of the mind, such as inventions, trademarks, copyrights,
and trade secrets. Intellectual property laws provide exclusive rights to creators and encourage innovation and
creativity.
• Importance of Compliance: Compliance with laws and regulations is crucial for businesses to operate legally, protect
their rights and interests, avoid legal disputes and liabilities, maintain ethical standards, and uphold corporate reputation
and credibility.

15
 Business Environment Analysis

• Analyzing the business environment involves assessing internal and external factors that impact a business's
operations and performance. Tools such as SWOT analysis (Strengths, Weaknesses, Opportunities,
Threats) and PESTLE analysis (Political, Economic, Social, Technological, Legal, Environmental) help
businesses identify risks and opportunities for strategic planning
• SWOT Analysis:
• Strengths: Internal factors that give a business a competitive advantage, such as strong brand reputation, innovative
products, talented workforce, or efficient processes.
• Weaknesses: Internal factors that hinder a business's performance or competitiveness, such as outdated technology,
limited resources, poor management, or ineffective marketing strategies.
• Opportunities: External factors in the business environment that present potential growth or success opportunities, such
as emerging markets, technological advancements, changing consumer trends, or regulatory changes.
• Threats: External factors that pose risks or challenges to a business's success, such as competitive rivalry, economic
downturns, legal and regulatory changes, or disruptive technologies.

16
What Are the Firm’s Strengths, Weaknesses,
Opportunities and Threats ?

17
SWOT Analysis

18
 Assessment Model: SWOT

Internal Assessment:
Organizational assets,
resources, people, culture,
systems, partnerships,
suppliers, . . .

External Assessment:
Marketplace, competitor’s,
social trends, technology,
regulatory environment,
economic cycles .

19
Identifying Resource Strengths
and Competitive Capabilities

20
Identifying Resource Strengths
and Competitive Capabilities

21
Identifying Resource Strengths
and Competitive Capabilities

22
Identifying Resource Strengths
and Competitive Capabilities

23
 Case Study

Mc Donald’s
SWOT Analysis INTERNAL

STRENGTHS WEAKNESSES
• Ranks very high on the Fortune Magazine's most admired list • Failing pizza test market thus limiting the ability to compete with
• Community oriented pizza providers.
• Global operations all over the world • High training costs due to high turnover.
• Cultural diversity in the foods • Minimal concentration on organic foods.
• Excellent location • Not much variation in seasonal products .
• Assembly line operations. • Quality concerns due to franchised operations.
• Use of top quality products • Focus on burgers / fried foods not on healthier options for their
customers.

OPPORTUNITIES THREATS
• Opening more joint ventures. • Marketing strategies that entice people from small children
• Being more responsive to healthier options. to adults.
• Expanding on the advertising on being more socially responsible • Lawsuits for offering unhealthy foods.
• Expansions of business into newly developed parts of the world.
• Further expansion of home delivery in the U.S. and other major • The vast amount of fast food restaurants that re open as
international markets competition..
• Introduction of a loyalty program for mobile ordering and payment • Down turn in economy affecting the ability to eat that much.
app • Intensifying competition
• The demand for higher quality ingredients • New food safety and work regulations
• Diversification through acquisition of smaller growing fast casual • Declining demand for fast-food
chains
• Growing middle class in China
EXTERNAL
Aim of SWOT Analysis
 Business Environment Analysis

• PESTLE Analysis:
• Political: Factors related to government policies, regulations, stability, and political risk that may impact
business operations, investment decisions, or market access.
• Economic: Factors such as economic growth, inflation, interest rates, currency exchange rates, and
consumer spending patterns that influence market demand, cost structures, and profitability.
• Social: Socio-cultural factors such as demographics, lifestyles, attitudes, values, and cultural norms
that affect consumer behavior, market trends, and business strategies.
• Technological: Technological advancements, innovations, disruptions, or trends that create new
opportunities, change industry dynamics, or require businesses to adapt their processes and offerings.
• Legal: Legal and regulatory factors governing business operations, industry standards, consumer
protection, intellectual property rights, environmental regulations, and employment laws.
• Environmental: Environmental factors such as climate change, sustainability concerns, natural
disasters, resource scarcity, or environmental regulations that impact business practices, supply chains,
and corporate responsibility.

26
 PESTLE Analysis

• P –Political
• E – Economical
• S – Social
• T –Technological
• L –Legal
• E- Environmental

27
 What is PESTLE Analysis?

• A PESTEL analysis - framework or tool used by marketers to analyse

-monitor the macro-environmental factors that have an impact on an
organisation. The result of which is used to identify threats and
weaknesses which is used in a SWOT analysis.

28
 Why we need PESTAL Analysis??????

• A PEST analysis helps you to consider what external

influences are important and the extent to which any
changes are significant for the future of your organisation.
• Changes in your business environment can create great
opportunities for your organization and cause significant
threats.

29
 Marketing Fundamemtals & Mkt Research

Marketing Fundamentals:
• Definition: Marketing involves identifying, satisfying, and retaining customers by creating, communicating, delivering, and
exchanging value. It encompasses market research, segmentation, targeting, positioning, and the marketing mix.

• Importance: Marketing is essential for businesses to understand customer needs, differentiate products or services, build
brand awareness, generate sales, and achieve competitive advantage.

Market Research and Analysis:

• Importance: Market research helps businesses understand consumer preferences, behavior, and market trends to make
informed decisions about product development, pricing, promotion, and distribution strategies.

• Methods: Market research methods include surveys, interviews, focus groups, observation, experiments, and data analysis
techniques such as regression analysis, factor analysis, and conjoint analysis.

30
 Product Development & Management

Product Development and Management:

•Product Life Cycle: The stages a product goes through from introduction to decline, including
introduction, growth, maturity, and decline. Product development involves identifying
opportunities, designing, testing, launching, and managing products to meet customer needs and
achieve business objectives.

•Importance of Innovation: Innovation is essential for sustaining product relevance, differentiation,

and competitiveness throughout the product life cycle. It involves continuous improvement,
adaptation, and the introduction of new features, technologies, or designs.

31
 Pricing Strategies

• Cost-Based Pricing: Setting prices based on production costs plus a markup to achieve desired
profit margins.

• Value-Based Pricing: Setting prices based on the perceived value to customers, considering
factors such as benefits, quality, and competitive alternatives.

• Competition-Based Pricing: Setting prices based on competitors' prices, positioning, or market

share to maintain competitiveness.

• Factors Influencing Pricing Decisions: Factors include costs, demand, competition, market
conditions, pricing objectives, product positioning, and customer perceptions of value.

32
 Distribution Channels

• Role: Distribution channels facilitate the flow of goods and services from producers to
consumers, including activities such as transportation, warehousing, inventory management,
and retailing.

• Options: Distribution channel options include direct channels (selling directly to consumers)
and indirect channels (using intermediaries such as wholesalers, retailers, agents, or
distributors).

• Pros and Cons: Direct channels offer more control and higher margins but require significant
investments, while indirect channels provide wider market reach and lower costs but less control
over the sales process.

33
 Promotion and Advertising

• Importance: Promotion involves communication activities aimed at informing, persuading, and

influencing target audiences about products or services. Advertising, sales promotion, public
relations, and personal selling are common promotional methods.

• Methods: Advertising involves paid messages through various media channels (TV, radio, print,
online) to reach mass audiences. Sales promotion includes discounts, coupons, contests, and
loyalty programs to stimulate sales. Public relations focus on managing the company's image,
reputation, and relationships with the public through media relations, event sponsorships, and
community engagement.

34
 Consumer Behaviour

• Factors Influencing Behavior: Consumer behavior is influenced by cultural, social, personal, and
psychological factors. Cultural factors include values, beliefs, customs, and traditions. Social factors
include family, reference groups, social class, and culture. Personal factors include age, gender, lifestyle, and
personality. Psychological factors include perception, motivation, learning, and attitudes.

• Decision-Making Process: The consumer decision-making process typically involves five stages: problem
recognition, information search, evaluation of alternatives, purchase decision, and post-purchase
evaluation. Marketers aim to understand and influence each stage to guide consumers toward purchasing
their products or services.

35
 Financial Statements Overview

Financial Statements Overview:

• Balance Sheet: A financial statement that shows a company's assets, liabilities, and shareholders' equity at
a specific point in time, providing a snapshot of its financial position.

• Income Statement: A financial statement that shows a company's revenues, expenses, and net income or
loss over a specific period, providing insights into its profitability.

• Cash Flow Statement: A financial statement that shows the inflows and outflows of cash and cash
equivalents from operating, investing, and financing activities, providing insights into a company's liquidity
and cash management.

36
 Financial Statements Analysis

Balance Sheet Analysis:

• Key Ratios: Balance sheet ratios include liquidity ratios (e.g., current ratio), solvency ratios (e.g., debt-to-equity
ratio), and profitability ratios (e.g., return on equity). These ratios help assess a company's financial health, leverage,
and ability to generate profits.
• Income Statement Analysis:
• Key Metrics: Income statement metrics include gross profit, operating income, net income, and earnings per share.
These metrics help assess a company's revenue generation, expense management, and profitability.
• Cash Flow Statement Analysis:
• Importance: Cash flow statement analysis helps assess a company's ability to generate cash, meet its short-term
obligations, fund investments, and distribute dividends to shareholders. Positive cash flow is essential for business
sustainability and growth.
• Key Metrics: Metrics include operating cash flow, investing cash flow, financing cash flow, and free cash flow.
Positive operating cash flow indicates the company's ability to generate cash from its core operations, while negative
investing and financing cash flows may signal investment or financing activities.

37
 Financial Ratio and Analysis

Financial Ratios and Analysis:

• Common Financial Ratios: Financial ratios include liquidity ratios (e.g., current ratio, quick ratio),
profitability ratios (e.g., gross profit margin, net profit margin), efficiency ratios (e.g., asset turnover,
inventory turnover), and leverage ratios (e.g., debt-to-equity ratio, interest coverage ratio). These ratios
help analyze various aspects of a company's financial performance, efficiency, and risk.

38
 Budgeting Basics

Budgeting Basics:
• Concept: Budgeting involves planning and allocating financial resources to achieve business
objectives. It helps businesses set targets, allocate resources effectively, control costs, and monitor
performance.

• Types of Budgets: Types of budgets include operating budgets (for day-to-day operations), capital
budgets (for long-term investments), master budgets (comprehensive budgets covering all aspects of
business operations), and flexible budgets (adjustable budgets based on actual performance).

39
 Cost Accounting Principles

Cost Accounting Principles:

• Principles: Cost accounting involves classifying, recording, and allocating costs to products, services, departments,
or activities to facilitate decision-making, cost control, and performance evaluation.

• Cost Classification: Costs are classified into direct costs (e.g., materials, labor) directly attributable to a specific product
or service and indirect costs (e.g., overhead, administrative costs) that cannot be directly traced to products or
services.

• Cost Allocation: Methods of cost allocation include job order costing (for customized products or services), process
costing (for standardized products or services), activity-based costing (for allocating costs based on activities), and
overhead allocation (for assigning indirect costs to cost objects).

40
 Managerial Accounting Techniques

Managerial Accounting Techniques:

• Cost-Volume-Profit (CVP) Analysis: CVP analysis helps businesses understand the relationship between
costs, volume, and profits to make pricing, production, and sales decisions.

• Variance Analysis: Variance analysis compares actual performance against budgeted or standard performance
to identify deviations and analyze the causes of differences.

• Activity-Based Costing (ABC): ABC assigns costs to activities based on their consumption of resources to
provide more accurate cost information for decision-making and performance evaluation.

41
 Financial Forecasting & Risk Management

Financial Forecasting:
• Importance: Financial forecasting involves predicting future financial performance, cash flows, and funding needs to support
planning, budgeting, and decision-making.

• Methods: Methods of financial forecasting include trend analysis (examining historical data trends), regression analysis
(using statistical techniques to predict relationships), and scenario analysis (evaluating different scenarios and their potential
impacts).

• Risk Management:
• Process: Risk management involves identifying, assessing, prioritizing, and mitigating risks to minimize potential losses and
maximize opportunities. It includes risk identification, risk assessment, risk response planning, and risk monitoring and
control.

• Techniques: Risk management techniques include risk avoidance, risk reduction, risk transfer, risk retention, and risk
diversification. Businesses may use insurance, hedging, contracts, or contingency planning to manage risks..

42
 Investments Basics & Capital Budgeting

Investment Basics:
• Concept: Investment involves allocating financial resources with the expectation of generating returns or profits over time.
Investments can include stocks, bonds, real estate, mutual funds, or alternative assets.

• Risk-Return Tradeoff: Investors face the tradeoff between risk and return, where higher returns are typically associated
with higher levels of risk. Investors must assess their risk tolerance, investment objectives, and time horizon when
making investment decisions.
• Capital Budgeting:

• Process: Capital budgeting involves evaluating and selecting long-term investment projects or expenditures that have
significant financial implications for the company. The goal is to allocate capital to projects that maximize shareholder
value.

• Techniques: Capital budgeting techniques include net present value (NPV), internal rate of return (IRR), payback period,
and profitability index. These techniques help assess the profitability, feasibility, and risk of investment project

43
 Financial Markets & Institutions

Financial Markets and Institutions:

• Types of Financial Markets: Financial markets include money markets (for short-term debt securities),
capital markets (for long-term debt and equity securities), primary markets (for new securities issuance), and
secondary markets (for trading existing securities).

• Financial Institutions: Financial institutions include banks, investment firms, insurance companies, pension
funds, and regulatory agencies. They facilitate the flow of funds between savers and borrowers, provide
financial services, and regulate financial markets.

44
Learning Assessment

45
 Learning Assessment 1 - MCQ
1. What is the primary goal of a business?
A) To provide employment
B) To maximize profit
C) To pay taxes
D) To satisfy government regulations

2. Which of the following is NOT a form of business ownership?

A) Sole proprietorship
B) Partnership
C) Corporation
D) Investment trust

3. In accounting, which financial statement shows a company’s financial position at a specific point in time?
A) Income statement
B) Cash flow statement
C) Balance sheet
D) Statement of changes in equity

4. Which of the following best describes business ethics?

A) Laws that govern business conduct
B) Moral principles that guide business behavior
C) Strategies to maximize profits
D) Techniques for increasing market share

46
 Learning Assessment 1 - MCQ
4. What is a key characteristic of entrepreneurship?
A) Risk aversion
B) Routine operations
C) Innovation and risk-taking
D) Following established business models

5. Which of the following is a primary function of management?

A) Innovating
B) Planning
C) Networking
D) Accounting

6. What is the most effective way to improve business communication skills?

A) Focus on verbal skills only
B) Practice active listening
C) Use technical jargon
D) Rely solely on written communication

7. Which of the following areas is NOT typically covered by business law?

A) Contract law
B) Criminal law
C) Intellectual property law
D) Employment law

47
 Learning Assessment 1 - MCQ
8. What is a common tool used in business environment analysis?
A) SWOT analysis
B) Financial auditing
C) Risk assessment
D) Budget forecasting

9. Which type of business ownership involves shared liability and decision-making among owners?
A) Sole proprietorship
B) Corporation
C) Partnership
D) Franchise

10. In accounting, what is the primary purpose of an income statement?

A) To show the company’s financial position
B) To present cash flows
C) To report on profit and loss over a period
D) To detail changes in equity

11. Which principle is NOT typically part of corporate social responsibility?

A) Environmental sustainability
B) Profit maximization
C) Ethical labor practices
D) Community engagement

48
 Learning Assessment 1 - MCQ
12. Which of the following best defines a mixed economy?
A) An economy with strict government control
B) An economy with no government intervention
C) An economy with both private and public sector involvement
D) An economy based on barter trade

13. What role does leadership play in business management?

A) Setting policies
B) Maintaining the status quo
C) Inspiring and motivating employees
D) Handling all administrative tasks

49
50