Business Studies I: The Business Basis, Environment, and Entrepreneurship
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The NIE Business Studies syllabus (implemented from 2017) examines the basis of business and its environment, entrepreneurship, and forms of business in grade 12, and management, operations, marketing, financial management, human resource management, and information systems in grade 13 (NIE, n.d.-c; NIE, n.d.-d).
What Is a Business?
A business is an organization that produces goods or services to satisfy needs and wants and earns a return. Business creates employment, income, goods and services, tax revenue, and innovation. The factors of production are land, labour, capital, and entrepreneurship, to which knowledge and information are often added. The functions of a business include administration, operations (production), marketing, finance, human resources, and research and development (NIE, n.d.-e).
Types of Business
| Basis | Types |
|---|---|
| Sector | Primary (agriculture, fishing, mining), secondary (manufacturing, construction), tertiary (services) |
| Ownership | Sole proprietorship, partnership, company (private and public), cooperative societies, public enterprises, and joint ventures |
| Size | Micro, small, medium, and large enterprises (SMEs are major employers) |
| Reach | Local, national, multinational |
Compare the forms on liability, capital, control, continuity, regulation, and taxation. For instance, a sole proprietor has unlimited liability and full control, while a company has limited liability and separate legal personality.
The Business Environment
The business environment consists of all external and internal factors that affect a business (NIE, n.d.-c; Robbins & Coulter, 2018).
| Environment | Examples |
|---|---|
| Internal | Management, employees, resources, culture, finances |
| Task (micro) environment | Customers, suppliers, competitors, distributors, financial institutions, regulators |
| General (macro) environment: PESTEL | Political, Economic, Social, Technological, Environmental, and Legal factors |
Sri Lankan examples include government policy, interest and exchange rates, demographic trends, digital adoption, climate change, and standards such as those of the Sri Lanka Standards Institution (SLSI). Use environmental scanning and SWOT analysis to link the environment with business decisions. Globalization brings competition and opportunities, and sustainability has become a key theme.
Entrepreneurship
An entrepreneur identifies opportunities, organizes resources, and bears risk to create value (Hisrich et al., 2020). Characteristics: initiative, creativity, risk-taking, persistence, leadership, and the ability to learn from failure. Entrepreneurship and economic development: job creation, innovation, regional development, and competition.
- Business idea and opportunity: identify unmet needs; test with potential customers.
- Business model: value proposition, customers, channels, revenue, costs (Osterwalder & Pigneur, 2010).
- Business plan: executive summary, description, market analysis, marketing plan, operations, management, financial plan, and risks.
- Lean start-up: build a minimum viable product, measure, and learn (Ries, 2011).
- Small businesses: advantages (flexibility, personal service) and challenges (finance, skills, competition, regulation). Support comes from government agencies, banks, and training institutions.
- Trends: social and green entrepreneurship, technology start-ups, e-commerce.
Business Ethics and Social Responsibility
Business ethics are the moral principles that guide business behavior. Corporate social responsibility (CSR) goes beyond profit: Carroll's (1991) pyramid describes economic, legal, ethical, and philanthropic responsibilities. Issues include fair treatment of employees, honest marketing, environmental protection, and community development. Sustainable business balances economic, social, and environmental goals.
Common Mistakes
- Treating the business environment as only the economy.
- Writing general answers without Sri Lankan examples.
- Confusing a partnership with a company.
CHAPTER 10