Business Management - Intermediate 2Business Enterprise © Copyright free to Business Education Network members 2007/2008B104/078 – Bus Enterprise – Business in Contemporary Society 1

Business Management - Intermediate 2Business Enterprise © Copyright free to Business Education Network members 2007/2008B104/078 – Bus Enterprise – Business in Contemporary Society 2

Business Management - Intermediate 2Business Enterprise © Copyright free to Business Education Network members 2007/2008B104/078 – Bus Enterprise – Business in Contemporary Society 3

Business Management - Intermediate 2Business Enterprise © Copyright free to Business Education Network members 2007/2008B104/078 – Bus Enterprise – Business in Contemporary Society 4 BUSINESS ENTERPRISE Business in Contemporary Society Role of Business in Society Types of Business Organisations

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Role of Business in Society 2.Types of Business Organisations B104/078 – Bus Enterprise – Business in Contemporary Society Business in Contemporary Society

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Role of Business in Society Wealth is created by businesses producing goods and services. These goods and services are bought by consumers (we are all consumers of goods and services). We all consume goods and services because we have needs and wants. B104/078 – BiCS – Role of Business in Society

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Needs A need is something which we consider that we cannot survive without. This includes food, water, shelter and clothing. The government have an obligation to provide society with its needs: Education Health Care Law and Order B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ A want is something that we can survive without but which we desire to have in order to improve our standard of living. Consuming goods and services which we desire to have gives us utility (satisfaction). Private Sector (see later) businesses rely on our utility so that they can provide for us and make profits. B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued Wants

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Production and Consumption Production Consumption Producer produces Goods and Services Resources Land, labour and capital Goods and Services Consumer consumes Goods and Services B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ LAND LABOUR CAPITAL The earth’s surface The workforce Equipment and materials The Factors of Production The entrepreneur combines these 3 factors of production together in order to produce a product or provide a service. B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ The earth’s surface including: soil sea air minerals Land – Natural Resources B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ The people who work for you: Labour – Human Resources teachers waiters secretaries architects accountants nurses B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Everything you need to help you produce your product or provide your service, for example: machinery stationery furniture buildings lighting computer networks Capital – Man-made Resources B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ This person is known as an entrepreneur and will: invest money into the business. take on all the risks of failure. will have excellent ideas. Enterprise – the fourth factor of production The person with the business idea. B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Sectors of Activity PRIMARY SECTOR Businesses which are involved in EXTRACTION – eg fishing, farming and mining. Businesses which are involved in MANUFACTURING – eg shoes (Clarks), PCs (Dell). SECONDARY SECTOR B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ TERTIARY SECTOR Businesses which are involved in providing a service – eg retail (Debenhams, Burger King), transport (Scotrail, British Airways). Sectors of Activity - continued B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Value Added Value is added at each stage of production. STAGEPROCESSVALUE AT COST VALUE AT PURCHASE VALUE ADDED PRIMARYTree felling, saw mill £100,000 SECONDARYWooden furniture manufacturer £120,000 £20,000 TERTIARYFurniture retailer £200,000 £80,000 TOTAL VALUE ADDED £100,000 B104/078 – BiCS – Role of Business in Society 1. Role of Business in Society - continued

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Types of Business Organisation Sole Trader Partnership Private Limited Company (Ltd) Public Limited Company (Plc) Some businesses belong to the PRIVATE SECTOR. These include: B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Types of Business Organisation - continued SOLE TRADER – Definition These are businesses which are owned by ONE person. These people are self-employed. Most sole traders are small businesses. Examples can include – hairdressers, small shops, restaurant. B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ SOLE TRADER – Advantages and Disadvantages Advantages: Easy and cheap to set up. Owner has complete control over all decisions. Profits are not shared. Flexibility in working hours and conditions. Smaller business offering a more personal service. Disadvantages: The owner has unlimited liability. High risk of failure. Difficult to raise finance. No one to share workload with. Difficult for owner to take holidays (cover and loss of earnings). 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ PARTNERSHIP – Definition These are businesses which are owned by two or more people (normally between 2 and 20). Many partnerships are small businesses which require specialist skills in different areas. Examples can include – accountants, solicitors, builders. 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ PARTNERSHIP – Advantages and Disadvantages Advantages: Easy to set up. Lots of expertise from partners. More finance available. Shared responsibility. Shared decision making. Disadvantages: The owners have unlimited liability. Disagreements can occur between partners. Partners can leave and upset the running of the business. 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ PRIVATE LIMITED COMPANY (Ltd) – Definition These are businesses which have shareholders as the owners. The shareholders are all known individuals and can very often consist of family members. The business operates through a Board of Directors (these can be the shareholders). An example of a well known Ltd Company is Baxter's Food Group Ltd. 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ PRIVATE LIMITED COMPANY – Advantages and Disadvantages Advantages: Shareholders have limited liability. More finance available. Shared responsibility. Shared decision making. Experience and expertise available. Disadvantages: Profits are shared amongst more people. There is a legal process involved in setting up the business. Restrictions due to legislation governing companies. 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ PUBLIC LIMITED COMPANY Plc – Definition These are businesses which have shareholders as the owners. The shares are sold to general public. The business operates through a Board of Directors who have control of the company. An example of a well known Plc would be Marks & Spencer Plc. The number of shareholders can run into thousands. These tend to be very large businesses – often global multinationals. 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ PUBLIC LIMITED COMPANY – Advantages and Disadvantages Advantages: Shareholders have limited liability. Large amounts of finance available. Shares can be bought and sold on the open market. Disadvantages: Set up costs can be high. There is a legal process involved in setting up the business. Restrictions due to legislation governing companies. They must publish their accounts annually. No control over ownership. 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ VOLUNTARY ORGANISATIONS These are run and managed by a committee of volunteers. Examples of voluntary organisations include: Charities – OXFAM, RSPCA Clubs – Scouts, Sports Clubs 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ VOLUNTARY ORGANISATIONS - continued Charities The government regulate the activities of charities (and keeps a register). Charities are exempt from paying taxes. Charities are often set up as trusts (no individual owner) where control and management is done through a Board of Trustees. 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ VOLUNTARY ORGANISATIONS - continued Charities Finance can be obtained through: fund raising, jumble sales public donations government grants lottery grants profits from their charity shops 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ VOLUNTARY ORGANISATIONS - continued Clubs/Scouts/Guides Finance can be obtained through: fee paying members lottery funding sports council local authorities 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Some businesses belong to the PUBLIC SECTOR. These include: Public Corporations – BBC, Royal Mail Public Services – refuse collection Government funded service providers: NHS (National Health Service) Social Security Defence 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ Local Authorities: Provide services at local level. Education (our schools (except private)) Housing Leisure Recreation 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation

Business Management - Intermediate 2Business Enterprise – Business in Contemporary Society © Copyright free to Business Education Network members 2007/ PUBLIC SECTOR - continued These organisations are owned by the tax payer and operated by the Government. The taxpayer finances these products and services. The Government make decisions on behalf of the taxpayer: what is priorities require tax money spent on them. how to manage and run public services. 2. Types of Business Organisation - continued B104/078 – BiCS – Types of Business Organisation