1.1. Introduction to Business Management

The role of businesses in combining human, physical and financial resources to create goods and services (AO2)

The nature of business

A business is set up because the founders believe they have found a product or service, which will both satisfy customers and provide a level of returns to meet their needs.

Customers have needs and wants. A need is generally a product or service required for survival, such as food, clothing or shelter. In addition, customers have wants, which are things they would like to have, but are not necessary for immediate survival, such as cars, television and laptops. Of course the nature of needs and wants varies from country to country, and region to region. In hot climates the need to keep cool, will mean most buildings are fitted with air conditioning systems, whereas in cold climates, the need will be for better insulation and heating.

The resources used to produce goods and services are scarce as they are limited in supply, but the needs and wants of customers are infinite. Therefore, resources must be rationed in some way and this occurs through the business charging a price for their outputs. The success of a business is measured by whether customers are willing to pay this price, and also whether after paying for all the costs of the business the owners can make a profit that justifies the risks of setting up the business in the first place.

Markets, customer and consumers

A market is a place or a process which brings together buyers and sellers so goods, services and information can be exchanged. Markets vary in size, range, and location. They may be physical in the sense of a shop or restaurant, or may be virtual as in the case of an e-commerce transaction.

The purchasers of the product in the market place are customers. However, those who enjoy the product or serve are consumers. In most cases these are one and the same. If you buy and then eat an ice-cream, you are both the customer and the consumer. However, if a parent buys an ice-cream for their child, the parent is the customer and the child is the consumer. This is a very important distinction in business, because when a firm is planning how to market their product they have to decide whether the customer or the consumer is most influential in the purchasing decision.

What is a business?

The term 'business' is used to describe all the commercial activities undertaken by the various organisations, which produce and supply goods and services.

A business has many features. It is:

A decision making organisation made up of groups of workers (employees), managers, directors and shareholders which exists in association with customers, suppliers, competitors, the environment, local, national and other government that uses factors of production to produce and sell goods and/or services so as to make a profit.

Decision-making

Firms and business studies are all about making and taking decisions. The basic decisions are:

• What to produce - what good or service - and for how long?
• How to produce and in what quantity?
• Who to sell the goods or services to - how to distribute?

Some decisions may have significant consequences. Companies deciding, for instance, to change location or products may invest large sums in their decisions. Poor decisions may result in the closure of the business itself. These types of decisions are called 'strategic' or high level decisions. Businesses need to get these decisions right.

Less important decisions, such as what brand of paper to use, have less important consequences. These day-to-day decisions are referred to as 'tactical' or 'low level' decisions. It is important, however, to remember that too many poor tactical decisions could affect the longer-term strategy. For example in a sports team, the team may be able to cover up for one or possibly two players not playing well. However, if everyone is having a 'bad day' the team will lose!

The business world is dynamic. Little stays the same for long. Management has to detect changes and take decisions on how to react to change on a regular basis. We will learn over the course of this topic and later topics, a whole range of techniques that make decision-making easier. These will be considered as business tools that assist decision making. However, remember, these techniques do not make decisions, people do. A skilled craftsman knows what tool to use and when.

Businesses also have to plan their progress. They aim first to survive, then to grow. This means they normally follow a formal planning cycle designed to address the following questions:

• Where are we now?
• Where would we like to be in the future?
• How are we going to get there?
• How will we know when we arrive?

This framework is a shorthand outline of the strategic decision-making process.

The Classification of a Business

In the same way that individuals have distinct personalities and characteristics, so do businesses. Classifying things help us to understand and define them. The following are ways that we can classify and group businesses, all of which will be examined in detail during this topic:

• By sector - there are two main sectors: private and public. The private sector includes all organisations owned, controlled and managed by private individuals for the purpose of making a profit. The public sector refers to organisations owned, controlled and managed by the government (or state) to provide essential goods and services for the general public. Governments play a role in the production of goods and services that are under-provided by the private sector, such as health and education.
• By level of activity - essentially this describes how close the business is to the customer in the distribution chain. For example, those businesses involved in the extraction of raw materials, such as oil, are very early in the distribution chain, whereas those which own retail outlets are much later in the chain and close to the final customer
• By size - we often classify businesses as small or large, but what do these terms mean? Unfortunately, this classification is complicated by the fact that there are number ways of measuring business size, such as capital employed, market share, sales turnover, profit and the number of employees.
• By legal structure -The way that a business is set up affects its legal rights and responsibilities.

Inputs: Factors of production

To produce goods or services, a firm must use a range of resources. These resources are called the factors of production or factor inputs. These resources are categorised into four groups:

• Land - this is the land itself, the factory site, for example. It also covers unprocessed raw materials derived from the earth or water.
• Labour - the services given by all employees of the business. A labour-intensive business is one that has a high proportion of labour inputs, normally because labour is relatively cheap.
• Capital - money, or the assets such as buildings, plant and equipment, which it has bought and uses in the production process. Capital can be thought of as anything used to produce something else. Money is capital only when it is used to buy business assets such as machinery and raw materials. A capital-intensive business depends more heavily on capital than the other factors of production. This is often because labour is relatively expensive.
• Enterprise - that 'spark' or idea which the founder or entrepreneur provides. This will include the planning that brings together the other three factors of production.

The provider of each factor receives a reward for being involved in production:

• Land owners receive rent
• Employees receive wages and salaries
• The providers of capital receive interest
• Entrepreneurs get to keep the profit - if there is any - for their risk-taking in setting up the business process and for their additional responsibilities and decision making in the business process.

Task 1: Take the quiz on the factors of production

https://quizizz.com/admin/quiz/575066d7dc89de4d55893a29/factors-of-production

The main business functions and their roles: human resources, finance & accounts, marketing and operations

The main business functions and their roles:

Business functions

A business is usually split into a series of different departments. Each department has a specific function in the operation of the business. For example, the accounting department will be responsible for the management of all financial matters relating to the business. This might include managing the businesses bank accounts, invoicing customers, collecting debts and so on. Each of these different functions is a crucial part of the overall business.

Human resources function (Human Resource Management or HRM for short)

Firms need people and the human resources department is responsible for the management of people. The responsibilities of the HR department will include:

• Recruitment - the process of finding appropriate people for a given role. This includes advertising a vacancy, selecting candidates for interview, managing contracts of employment, job descriptions and so on.
• Training - both new and existing staff will need training to help them develop and improve their skills and this will be the responsibility of the HR department.
• Pay - people work for money and this process needs managing. How much is each job worth, what other benefits do employees get (pension entitlement, fringe benefits and so on), what happens when people are sick? All these questions and issues are dealt with by the HR department.
• Employee relations and welfare - this includes pay negotiations with employees, disciplinary procedures, considering grievances of employees as well as health and safety, social activities and so on. All these will usually be handled by the HR department.

Human Resources - labour or workforce

Human resources is a collective term for the people within a firm. They are often described and classified by their function:

• Owners - the nature of ownership depends on the legal structure of the firm. The owner may be one person (sole trader) or a group of individuals (partners), or ownership may rest with a group of shareholders.
• Directors - people appointed by the owners to look after their interests. Some directors are also employees. These are the executive directors who are responsible for the day-to-day management of the firm. The senior executive director is the Managing Director or the Chief Executive Officer (CEO). The other directors, the Non-Executive Directors, only sit on the Board and are expected to watch and advise both the board and the owners.
• Managers - people responsible for the planning and control of the business.
• Employees - people who operate the business on a day-to-day basis.

People may be in more than one group. An employee may also be a shareholder, for instance. This can cause a serious conflict of interest.

Accounting and finance function

The accounting and finance department are responsible for all issues related to the management of money and the flows of money around the business and between the firm and other firms or customers. The Accounting function involves the collection, recording, presentation and analysis of financial data. This may include 'management accounts' for the directors of the firm to view on a regular basis or the public or 'financial accounts' for anyone to view (if the firm is a public limited company). The Finance function, on the other hand, is concerned with raising the money required for all business operations and the decision-making on how and where that money should be spent.

The responsibilities of the finance function include:

• Sources of finance -decisions about the most appropriate source of finance for each activity.
• Cash flow -the way in which money moves in and out of the business. It is important to balance and manage these flows. If too much money flows out at a given time, the firm is in danger of insolvency.
• Credit control - the process of collecting debts and managing payments. At any given time a firm will be owed money by its customers and may owe money to its suppliers.

Marketing function

This is seen by many as the heart of the business as the marketing department tends to have the most direct contact with customers. It is important to realise that marketing is not the same as 'selling', but is a much broader concept. The responsibilities of the marketing department may include:

• Researching the market - identifying market opportunities, examining the nature of customers and potential customers, understanding the target market for the good or service, testing consumer reaction to potential products and so on.
• New product development - the marketing department will often work together with the production department to develop new products and services. The marketing department will test if there is a market for the product, identify the features or characteristics that the product requires and may carry out test launches of the product in advance of the full product launch.
• Marketing mix - the marketing department will develop the mix of strategies that will help with selling the product. This includes the pricing of the product, the promotion, the nature of the product and the distribution channels for the product.

Production function (Operations Management or OM for short)

The production function is perhaps the clearest of all. It may also be called the 'operations' function of the firm. However, as with marketing, there is more to the production function than immediately meets the eye. The responsibilities of the production department may include:

• New product development - in association with the marketing department
• Research and development (R & D) - R&D refers to systematic investigation or innovation; the outcomes of which are new or improved materials, products, devices, processes, or services. Prototypes of new products may be tested by the marketing department with potential customers.
• Production planning - the production department will consider the layout of the facility, the optimum location of production, the method of production, the type of machinery and so on.
• Quality control - the quality of the product or service is crucial if the reputation of the firm is to be maintained and enhanced.
• Distribution - the production department will organise the distribution of the good or service to the customers. This may be through middlemen or 'intermediaries' such as retail shops or agents or direct to the customer through e-commerce.
• Purchasing and stock control - the production department is responsible for the purchase of stocks or raw materials required for production.

Outputs: Goods and services

The output of a business is goods and services. These are destined either for other firms or for the domestic consumer. Goods are solid items that can be seen and touched (tangible or visible items) such as shoes, food, cars, golf clubs, Manchester United or Barcelona football strips and beef burgers.

Services (invisible or intangible items) are things that cannot be seen or touched, but have visible results, such as services provided by hairdressers, doctors, dentists, solicitors, and banks. Customers pay for skill and experience that they do not possess, or would prefer to purchase to save time. Services can be split into personal or commercial (business) services, although there are often overlaps between the two. For instance, banks offer financial services to both individual and business customers.

The nature of business activity in each sector and the impact of sectoral change on business activity (AO2)

Changes in Economic Structure

Structural change refers to adjustments in the relative importance of different sectors of an economy over time, usually measured in terms of their share of output, employment or total spending.

Since the industrial revolution, structural change in most countries involved shifts from subsistence agriculture to commercial agriculture, an increase in the relative significance of manufacturing and, at a later stage, a shift toward service industries. Structural change also involves shifts between the regions of large national economies, and changes in the composition of a country's imports and exports.

There are many models of economic development and arguments about the stages through which countries travel as they develop. None of these are really relevant to business and management except in the sense that changes in the relative significance of economic sectors will have effects on demand and employment conditions in an economy.

The IMF classifies countries into three main categories:

• developing countries (LEDCs)
• transitional or newly industrialising countries (NICs)
• industrial countries (MEDCs)

Generally speaking, developing countries are characterised by subsistence primary production (mainly agriculture) and low levels of income per head. As these countries develop they go through a process of Industrialisation, which refers to the move from an economy dominated by agricultural output and employment to one dominated by manufacturing. This will have the effects such as:

• Urbanisation
• More capital-intensive industries
• Increases in GDP and living standards as per capita incomes increase
• Increasing employment opportunities

As development proceeds there is a move towards tertiary or service based sector activity as the main contributor to output and employment. This will have effects such as:

• Higher household incomes and changes in consumption patterns towards luxury goods
• Increasing specialisation
• An increase in demand for personal services such as financial planning, hairdressing and personal health
• More leisure time and greater spending on industries such as entertainment, sport and travel
• The growth of technology and communication related industries

Development does not always fit neatly into this primary to secondary to tertiary model. Some developed economies, such as New Zealand have been able to use automation to make their primary industries more efficient and several more economically developed countries, like Japan and Germany, retain a significant manufacturing base by value.

All three sectors of an economy are interdependent in the sense that each sector relies on the others. For example, the largest global manufacturers also require finance, raw materials, energy supplies and transport.

As Business and Management students you need to have an awareness of the effect on relationships within and between countries as they develop. The obvious examples are China and India. As they develop rapidly, the movement of goods and services between countries increase as do the opportunities for employment in related industries. Demand patterns will also change in relation to the accessibility of imported goods and services.

Sectoral change in the Hong Kong economy 2011-2017- http://www.censtatd.gov.hk/hkstat/sub/sp250.jsp?tableID=036&ID=0&productType=

The role of entrepreneurship (and entrepreneur) and intrapreneurship (and intrapreneur) in overall business activity (AO3)

Entrepreneurship

Entrepreneurship is the willingness to take risks in return for potential profits. What motivates someone to become an entrepreneur? Money of course! The chance to earn significant profits, buy a yacht, take numerous holidays, buy designer goods and send the kids to the best private schools. But, wait! Is money and personal wealth really the main motivation?

Evidence suggests that there are many more reasons why someone wants to start a business. Every business starts small. But by taking on some calculated risks, a lot of determination and some luck, a start-up business can become very large, profitable and valuable. However, not every entrepreneur wants to build a big business and earn a fortune.

The objectives when starting a business can be broadly split into two categories:

• Financial objectives, and
• Non-financial objectives

The media tend to focus on the financial objectives – so let's deal with these first.

Financial objectives

Most business start-ups begin with one main financial objective – to survive.

Why survival? Because a large percentage of new businesses do not survive much beyond their launch. The entrepreneur discovers that the business idea is not viable – the business cannot be run profitably or it runs out of cash. Start-ups have a high failure rate.

Survival is about the business living within its means. To survive, the business needs to have enough cash to pay the debts of the business as they arise – suppliers, wages, rent, raw materials and so on. To survive, a business needs to have:

• Sufficient sources of finance (e.g. cash, a bank overdraft, share capital)
• A viable business model – i.e. one which can make a profit

If survival can be assured, then profit is the next most important financial objective for a new business. A profit is earned when the revenue of the business exceeds the total costs. The entrepreneur can choose to reinvest (aka "retain") the profit in the business, or take it out as a personal payment or dividend.

For many small business owners, profit is the return for all the hard work and risks taken. Profit is thereward for taking a risk and making an investment. Ideally, the profit earned is sufficient to provide the entrepreneur with enough income to live. In many cases it will be more than sufficient, once the business has been trading successfully for a few years

However, it is important to appreciate that, to make a sustainable profit, a new business needs to be able to:

• Add value
• Sell into a large enough market

Another financial objective is personal wealth. Some entrepreneurs have an objective that goes beyond wanting to earn an adequate income. They aim to build a valuable business that can substantially increase their personal wealth.

Non-financial objectives

Contrary to popular belief, starting a business is not always about financial objectives. Very often a new business is started with other, non-financial objectives in mind.

Here are some of the non-financial motives that are often quoted by entrepreneurs:

• More control over working life – want to choose what kind of work is done. The need for greater independence is a major motivator.
  • Need a more flexible and convenient work schedule, including being able to work from or close to home. This motive is an important reason behind the many home-based business start-ups
  • Feel that skills are being wasted and that potential is not being fulfilled
  • Want to escape an uninteresting job or career
  • A desire to pursue an interest or hobby
  • Fed up with being told what to do – want to be the boss!
  • Want the feeling of personal satisfaction from building a business
  • Want a greater share of the rewards from the effort being put in – compared with simply being paid by an employer
  • Fed up with working in a business hierarchy or bureaucratic organisation (people with entrepreneurial characteristics often feel stifled working and having to co-exist with others!
  • As a response to a shock or other major change in personal circumstances – e.g. redundancy, divorce, illness, bereavement

• Task 6: What characteristics of entrepreneurship do the following individuals exhibit? Do they share any characteristics?

See the following for characteristics of successful entrepreneurs - https://www.under30ceo.com/10-qualities-of-a-successful-entrepreneur/

Intrapreneurship

Established businesses often wish their employees and management were more “entrepreneurial”. In other words, they want people within an existing, established business to display the characteristics and traits associated with entrepreneurs.

Intrapreneurship involves people within a business creating or discovering new business opportunities, which leads to the creation of new parts of the business or even new businesses.

An intrapreneur is someone within a business that takes risks in an effort to solve a given problem. Two famous examples of products that were the result of intrapreneurial activity are:

Gmail (Google)

Employees at Google are allowed time for personal projects. Some of Google’s best projects come out of their 20 percent time policy. One of these was Gmail, launched on 1 April 2004.

PlayStation (Sony)

Ken Kutaragi, a relatively junior Sony Employee, spent hours tinkering with his daughters Nintendo to make it more powerful and user friendly. What came from his work turned into one of the world’s most recognisable brands - the Sony PlayStation

Potential business benefits of intrapreneurship

In addition to identifying and executing new business opportunities, intrapreneurs can help drive innovation within businesses. In a similar role to that of entrepreneurs, intrapreneurs seek to provide solutions to problems – for example low productivity, excess waste, poor quality.

What can a business do to encourage intrapreneurship?

● Look out for – and encourage - entrepreneurial activity

● Give employees ownership of projects

● Make risk-taking and failure acceptable

● Train employees in innovation

● Give employees time outside the confines of their job description

● Encourage networking & collaboration

● Reward entrepreneurial thinking and activity

Source: http://www.tutor2u.net/business/reference/intrapreneurship

What is Intrapreneurship?

Task 8a: Watch the videos about Intrapreneurship below.

Take note of his definition of intrapreneurship, the characteristics of an intrapreneurs, and identify connections between intrapreneurship and the CUEGIS concepts. Complete this task by creating a mind-map.

Mind mapping tools

1. Coggle - https://coggle.it/?utm_source=zapier.com&utm_medium=referral&utm_campaign=zapier
2. Draw.i0 - https://www.draw.io/?utm_source=zapier.com&utm_medium=referral&utm_campaign=zapier
3. Mindmeister - https://www.mindmeister.com/?utm_source=zapier.com&utm_medium=referral&utm_campaign=zapier
4. bubbl.us - https://bubbl.us/

Task 8b: Watch the following videos on intrapreneurship at Google and determine how the corporate culture at Google integrates 'smart creatives' into the organisation - https://www.officevibe.com/blog/rise-smart-creative

Reasons for starting up a business or an enterprise (AO2)

Reasons for starting up a business or an enterprise

1. You are your own boss

If you start up your own business, the only person you have to answer to is yourself. Being your own boss gives you the freedom to do things your way and implement your own plans.

2. You get to do what you’re interested in

The good thing about being an entrepreneur is that you choose what kind of firm you start up, and where. So, providing that you’ve done your research properly and there is a gap in the market, you can turn a hobby or interest into a profitable enterprise.

3. Your business = your deadlines

Clocking on and off in a drab job that generates profits for your cigar-chomping boss can become slightly soul-destroying after a while. Start your own firm and you get to set and meet your own deadlines. Meeting your own targets can be a huge motivation to work hard and drive the business forward.

4. Get creative

If you have considered going it alone, you will have thought out how you would do things your way. Being an entrepreneur gives you the freedom to express yourself and develop your concept in any way you choose. Of course, there are always financial constraints, but the ability to be as creative as you like is far more appealing than a one-dimensional job.

5. It’s not that hard to do

From the Enterprise Finance Guarantee to various inner-city projects, the government certainly can’t be accused of doing absolutely nothing for budding entrepreneurs. With the Prince’s Trust, Shell LiveWIRE and other support organisations also up and running, you should be able to secure the help and funding needed to get you started.

6. It can be very profitable

If you think that it’s just large corporations that make big profits, you would be wrong. There are countless stories of entrepreneurs hitting on a great idea, exploiting it well and being well on their way to their first million by the end of the year. Although the start-up process can be tough, with long hours and little money not uncommon, if you run your business well, the rewards can be huge. And, from a purely selfish point of view, you will get most of the profits yourself.

7. It’s varied

Dealing with spreadsheets one minute, suppliers the next and then having a look around your new office – an entrepreneur’s work is not just busy, it is also extremely varied If you want a career where every day is different, going it alone could be for you.

8. You can have a second career

Of course, if you don’t fancy giving up a regular income, you can always get the best of both worlds and stay as an employee while running your own firm. Although juggling the two can be tricky, having a successful sideline should be a very profitable option. Do something that you are interested in and go for it.

9. Cut the commute

Although most small firms operate from offices, many entrepreneurs find that operating from home reduces costs dramatically in the early stages. As well as providing familiar, comfortable surroundings to work in, if you are based at home you do not have to endure the daily tangle with public transport or clogged up roads.

10. The big dream really can become reality

You may feel that starting up a small business won’t lead to anything more than having your own desk and taking on a few extra staff so you can open that branch in Bracknell that you always planned. However, it is possible to make it really big – just look at the late Anita Roddick, who became a Dame thanks to her entrepreneurial achievements. She started a small shop in Brighton on a shoestring in the 1970s. Before long, she had a chain of Body Shop stores across the UK and was launching her concept in the USA. So, if you dream of being the next Richard Branson, don’t dismiss it at a mere fantasy – it really could happen. What are you waiting for?

Source: http://startups.co.uk/10-reasons-to-start-a-business

Task 8c: Identify, in your opinion, which of the reasons given above for starting a business would have resonated with Wong, Yun-Keung, Wang, Xing and the founder of Noosa Yoghurt.

Common steps in the process of starting up a business or an enterprise (AO2)

Starting a business

There are six main stages to starting a new business:

1. Identifying a business opportunity and a target market and generating ideas about meeting the needs and wants of that market
2. Producing a business plan
3. Selecting the correct form of business organisation
4. Surviving the first few months of operations
5. Raising the initial finance from personal savings, family or friends, redundancy payments or borrowing.
6. Choosing a suitable location

Starting a new business is extremely risky and businesses are particularly vulnerable in the first 18 months to two years of operation. Indeed, about half of all new businesses fail within this period.

Case of Bytedance

PayPal Mafia

• Task 12: What lessons about entrepreneurship do these members of the PayPal Mafia communicate to budding entrepreneurs? Note down 3-5 pieces of information. You will be assigned to a group and each group will take one entrepreneur. Fill in the relevant information into the Google Doc

The elements of a business plan (AO2)

Nature of the Business Plan

Essentially, a business plan sets out the specific steps necessary to implement a strategy and achieve objectives. Planning can be defined as the design of a desired future and the specification of effective ways of bringing it about, or as examining the future and drawing up a plan of action. A business plan is a document which:

• Designs and precedes action
• Is directed at achieving desired results
• Is a response to the belief that we need to do something about an organisation’s future state or it will not occur
• Sets out the key resource issues that follow on from the plan

The business plan needs to span a period of time, usually three to five years. It may even be necessary to take a longer perspective in some cases. The longer the time span, the less reliable will be the calculations.

To produce an effective business plan you would need to do the following:

• Establish a clear definition of the business the company intends to be in, so that the business plan can focus on the right area
• Clearly define the objectives of the company. They may be few in number but they are fundamental to the development of the business plan
• Obtain accurate accounting information from which to work. Plans prepared for any business will be examined in terms of the extent to which they are based on current assumptions
• Evaluate key strengths and weaknesses, opportunities and threats
• Obtain an historical analysis of business performance to date.

Framework of the corporate business plan

Business plans may take many formats. However, they all include a number of essential elements. Essential elements include:

• an introduction,
• mission statement,
• objectives,
• financial situation and
• plans dealing with marketing, sales, management and organisational issues.
• Other essential elements concern financial, contingency and human resource planning.

Task 13: Producing a successful product or service: a case study - James Dyson

In 1974, James Dyson, an unknown industrial designer decided to become an entrepreneur starting a business with his sister and her husband to make the Ballbarrow. This was the first significant update of the wheelbarrow since the medieval era. Dyson's innovation used a plastic ball instead of a wheel for easier manoeuvrability. Like nearly all of Dyson's inventions, the idea for the Ballbarrow was driven by personal frustration, because his wheelbarrow kept getting stuck in the mud when he was working in the garden.

In the late 1970s, Dyson had the idea for an innovative vacuum cleaner that would not lose suction as it picked up dirt. Five years and 5,127 prototypes later, the 'G Force Dual Cyclone' arrived and revolutionised the vacuum cleaner market. James Dyson offered his invention to major manufacturers. However, no manufacturer or distributor would launch his product as it would disturb the valuable cleaner-bag market worth $500 million every year, so Dyson launched it in Japan in 1986 selling direct to customers through catalogues. The G Force quickly emerged as a cult favourite, despite its rather high price tag. Dyson was forced to sue other companies for patent infringements, and the cases dragged on for years and nearly bankrupted him.

After failing to sell his invention to any major manufacturer, Dyson was forced set up his own manufacturing company and in June 1993 opened his first research centre and factory in the UK.

Dyson products quickly began to dominate markets around the world, becoming the largest selling upright vacuum cleaner in Western Europe, The USA and Australia. Naturally, following the success of the 'bag less' technology other major manufacturers began to market their own versions, some copying aspects of Dyson's cyclonic vacuum cleaners. Dyson sued Hoover UK for patent infringement and won around $5 million in damages.

The company continues to expand, experimenting with new ideas and technologies (see the Dyson web site for details of their products). In 2006 Dyson launched a fast and hygienic hand dryer, using a 400 kmh. stream of air.

A further development of Dyson's new air technologies is the innovative series of Air Multiplier fans using new design to draw in air and amplify it up to 18 times, producing an uninterrupted stream of smooth air with no blades or grill. Dyson continues to be one of the innovative manufacturers in the world.

a) Define the terms:

a. USP

b. Entrepreneur

b) Explain why Dyson wanted to set up his business.

c) Analyse the problems that start-up businesses, such as Dyson face.

d) Discuss the importance of protecting intellectual property rights for high technology companies like Dyson.

Also see: World News/James Dyson James Dyson Cleans up