Business Management: A Malaysian Perspective All Rights Reserved
Oxford University Press Malaysia, 2008 1 1
CHAPTER ONE
Business Fundamentals
& Todays Dynamic
Business Environment
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 2
LEARNING OUTCOMES
In this chapter, you will learn to:
Define and explain the basic concepts of business,
profit, entrepreneurship and risk taking.
Explain how businesses add to the societys standard of living
and quality of life.
Discuss how businesses should respond to stakeholders.
Explain how business principles may be used in non-profit
organizations.
Identify and explain the business environment.
Define ethics as a social responsibility and rationalize its
importance in the conduct of business.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 3
BASIC BUSINESS CONCEPTS
Business organization
Profit
Entrepreneur
Risk taking
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
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BUSINESS DEVELOPMENT AND
ITS CONTRIBUTION TO SOCIETY
How businesses add to standard of
living?
Standard of living refers to the amount of
goods and services people can buy with the
money they have.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 5
BUSINESS DEVELOPMENT AND
ITS CONTRIBUTION TO SOCIETY
(cont.)
How does it contribute to quality of
life?
Quality of life refers to the general well-being
of a society in terms of political freedom, a
clean natural environment, education, health
care, safety, free time and everything else that
leads to ones satisfaction.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 6
Differentiate the Stakeholders
and Shareholders.
Stakeholders : Individuals or parties that
stand to gain or lose by the policies and
activities of a business.
Shareholders : Individuals or parties that
invest their funds In a business
Business Management: A Malaysian Perspective All Rights Reserved
Oxford University Press Malaysia, 2008 1 7
BALANCING THE INTERESTS OF
STAKEHOLDERS
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 8
ARE BUSINESS PRINCIPLES
APPLICABLE TO NON-PROFIT
ORGANIZATIONS?
Business principles are applicable to non-
profit organizations.
The same set of skills and knowledge are
required to manage it.
A non-profit organization is an organization
set up with an objective of not making profit,
e.g. government bodies and NGOs.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 9
BUSINESS ENVIRONMENT
Surroundin
g factors
that either
promote or
restrict
the
developmen
t of
todays
businesses.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 10
ETHICS AND SOCIAL
RESPONSIBILITY
IN THE CONDUCT OF BUSINESS
THE CONCEPT OF ETHICS
Ethics refers to the standards of moral behaviour
that are accepted by society as right versus wrong
(Nickels et al., 2008).
It can be described as a set of principles that
contains behavioural codes to determine what is
right or wrong.
It outlines the moral duty and obligations that any
human being should practise.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 11
THE DIFFERENCE BETWEEN
MORALITY AND ETHICS
Morality relates to the norms, values and beliefs
embedded in social processes which define right or
wrong for an individual or a community.
Ethics is concerned with the study of morality and the
application of reason to explain specific rules and
principles that determine right or wrong for a given
situation.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 12
ISLAMIC MANAGEMENT: VALUES
AND ETHICS COMPONENTS
Values and Ethics Components in Islamic Management
Religious values
Taqwa (God-consciousness), syukur (gratitude, being grateful), tawakkal (relying
on Allah after making own efforts), muhasabah (self-evaluation), justice and amar
makruf nahi munkar (promoting good and forbidding evil).
Professional values
Education, skill, honesty, punctuality, trustworthy and syura (consultation).
Personal values
Accountability, moderation, excellence, patience, tolerance, humble and salam
(peace, greetings to show respect and compassion).
Quality values
Quality, productivity, itqan (the level of quality work), istiqamah (commitment,
being straight and steadfast), efficiency, creativity, innovation,
collectivity and ihsan (benevolence, i.e. being kind
and helpful).
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
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UNIVERSALLY ACCEPTED
MORAL VALUES
GOOD VALUES BAD VALUES
Compassion Cheating
Courage Cowardice
Honesty Cruelty
Integrity Deceit
Respect for human life Greed
Lying
Self-control
Selfishness
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WHY IS IT IMPORTANT TO
MANAGE BUSINESSES IN AN
ETHICAL MANNER?
To keep existing customers
To attract new customers
To avoid lawsuits
To reduce employee turnover
To please customers, employees and society
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
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SOCIAL RESPONSIBILITY
AND SUSTAINABLE
DEVELOPMENT
THE CONCEPTS OF SOCIAL RESPONSIBILITY
AND SUSTAINABLE DEVELOPMENT
Social Responsibility (SR)
The obligation of a business to maximize its positive
impact and minimize its negative impact on society,
being a part and parcel of the community at large.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 16
THE CONCEPTS OF SOCIAL
RESPONSIBILITY AND
SUSTAINABLE DEVELOPMENT
Sustainable Development (SD)
A pattern of resource use that aims to meet human
needs while preserving the environment, so that
these needs can be met not only in the present, but
also for future generations.
BUSINESS MANAGEMENT: A Malaysian Perspective (Second Edition) All Rights Reserved
Oxford Fajar Sdn. Bhd. (008974-T), 2012 1 17
THE IMPORTANT OF BUSINESS
PROPOSAL / BUSINESS PLAN
A Business Plan is a detailed written statement that
describes the nature of business, target market, the
advantages the business would have in relation to
competition, and qualification of the owners. This
document is used in obtaining financial assistance from
banks and financial institutions.
Business Management: A Malaysian Perspective All Rights Reserved
Oxford University Press Malaysia, 2008 1 18
ESSENTIAL ELEMENTS OF A
BUSINESS PLAN
1.Cover
Letter
2. Executive
10. Appendix
Summary
9. Manufacturing 3. Company
Plan Background
8. Location 4. Management
Analysis Team
7. Capital 5. Marketing
Required Plan
6. Financial
Plan
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