The Basics of business

The Basics of business

Business is taught in business schools around the world. We're business begins what is the foundation of business in other words. What do you need in terms of background in order to begin understanding business. The two areas that you need to understand is

Quantitative method in Business

Quantitative methods basically mean math and economics. You need to understand basic economics before you can do any business studies. Let’s talk a little bit about each if you're a business student you want to take basic quantitative methods.

We separate these quantitative methods in two subjects or in two areas. The first one is just business math. This is standard math which is used mostly in business. There is nothing very special.

Mathematics is a broad field and you're going to study only those specific things that are commonly used in business.

Of course, accounting finance in general so that's business math. I think you are already or have already taken a business math course. The second one that you do is business statistics.

Business statistics is about analyzing and interpreting data usually in the real world you will see a lot of data maybe interest rates over many years maybe exchange rates over many years maybe economic growth or if you want to look at economic growth you may try to relate the economic growth to investment or economic growth to consumption or economic growth.

In the case of Korea with exports so statistics will try to tell your basic relationship which is let's say in the case of Korea most important for economic growth of Korea is it consumption or is it investment or is it exports you may have many different theories and you may guess many different things but with statistics.

You can get the data you can analyze and you can try to discover relationships and based on the data you can conclude which is more important or which is the most important factor.

In other words in business statistics have you already studied. Basic statistics or you will have studied already, so basic statistics will tell you these relationships. The second foundation before you begin real Business Studies is economics.

Economics is divided into over 15 different fields. You have let me just read microeconomics and labor economics. You have International Economics yet international trade international finance you have labor economics.

In general basic economics which we sometimes call principles of economics or introduction to economics includes these two fields.

1. Microeconomics

2. Macroeconomics

Microeconomics in general Business

To understand general business micro economics concerns the behavior of individuals, the behavior of consumers and the behaviors of families.

How families get jobs, their income, how families spend their income, how much they spend on food. How much on cars, how much on housing in other words, how families make economic decisions.

The economic decisions are about making money and spending money respectively investing money. In other words, what you do with your money is microeconomics.

The second part of microeconomics is about the businesses. You look at one business and how the business is managed.

Microeconomics tells you how much labor to employ, how much capital to employ possibly .A little bit of how much to borrow then it tells you how much to produce and how to price your product.

In general the main concern for firms is how to maximize profits about business is about making money, is about making profits.

In microeconomics focus is on how to make maximum profits which usually boil down to how much to produce and sell and at what price.

Macroeconomics in Business

Macroeconomics is about the general economy. The general economy is about production and output .We call this GDP gross domestic production is about labor.

As an employ we call these jobs it's about are there a lot of jobs or a future next one is about wages are the jobs well paid or poorly paid.

Interest Rate in Capital

The next thing is about the interest rate. Interest rate is the cost of capital so macroeconomics concerns labor, in the cost of labor and capital in the cost of capital.

Cost of capital is interest rates and macroeconomics is concerned about exports and imports. It is concerned about the most important price in the economy.

The most important price of the economy is the price of money. We call the price of money exchange rate how much the Korean currency exchanges for Chinese currency for US dollars for Japanese yen or for European euro.

So macroeconomics again is concerned about employment and wages about business output in business prices.

In other words, the profitability of MP exports imports and exchange rates. This is what macroeconomics is all about, so these are the foundations before you need to specialize further into business.

When you study business, you study four main areas we can also call them four main fields or four main subjects which are categorized as

1. Accounting

2. Finance

3. marketing

4. Management

Importance of Accounting in Business

Accounting is the language of business, translating business activity into numbers so that numbers can everyone understand.

The trick in accounting is that you as Koreans can read European business accounts and you can interpret and understand them. Or me, having studied in the US and coming from Bulgaria, can read Korean accounting statements and understand what they mean.

Accounting is separated sometimes they call it principles of accounting sometimes they call it introduction to accounting. The accounting field is generally separated in two major sub areas which are

· Financial accounting

· Managerial accounting

This is the foundation for every business your choices or up to the goals of the university or the goals of the administration.