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 CHAPTER ONE

Business Fundamentals
& Todays Dynamic
Business Environment

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 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.

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 BASIC BUSINESS CONCEPTS

Business organization
Profit

Entrepreneur

Risk taking

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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.

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 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.

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 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

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 BALANCING THE INTERESTS OF
STAKEHOLDERS

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 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.

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 BUSINESS ENVIRONMENT

Surroundin
g factors
that either
promote or
restrict
the
developmen
t of
todays
businesses.

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 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.
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 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.

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 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).

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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

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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.

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 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.

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 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.

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 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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