STANDARD GRADE BUSINESS MANAGEMENT REVISION

Unit 1 - Introduction What organisations have in common – Name; aims; resources; image; rules Goods/services

Resources/Factors of Production Land (natural resource) Labour (human resource) Capital (man-made resource) Enterprise (ideas, risk-taking)

SOLE TRADER (One person business) Easy to set up Gets all profit Makes all decisions Quick decision making Local/personal service Business affairs kept private Limited amount of capital May be hard to get loans Prices tend to be higher Unlimited liability Suffer all losses Long hours No shared ideas or shared workload Hard to take time off

PARTNERSHIP 2-20 people working together Need a Partnership Agreement Additional capital Shared ideas Different areas of expertise Shared workload Shared responsibilities Can have sleeping/silent partners Business affairs kept private Unlimited liability (for at least 1 partner) Shared profits Spread of control Takes time to make decisions Can be disagreement Partnership ends if one leaves Limit of 20 partners

COMPANIES Must register a new company: Memorandum of Association Articles of Association Capital from shareholders Shareholders have limited liability Accounts are made available

COMPANIES PRIVATE LIMITED COMPANY  At least 2 shareholders  Minimum £2 starting capital  Shares not advertised to general public PUBLIC LIMITED COMPANY  Need minimum starting capital of £50,000  Shares can be sold to general public  Owned by shareholders, run by Board of Directors  Decision making can be slow

SHAREHOLDERS Willing to invest to:  get dividend if profit is made  make money selling shares if company does well  Have a say in running of company – get to vote at AGM (Annual General Meeting)

FRANCHISE Buying into an existing business FRANCHISOR sells rights to a new trader FRANCHISEE buys into an established business – name, products/brand goods, assistance (training, financial aid etc)

CO-OPERATIVE CONSUMER CO-OPERATIVE selling goods/service cheaper, profits given back to customers in form of dividend, members have a vote WORKER CO-OPERATIVE a business owned by workers, all with shares and involved in decision making

SIZE OF BUSINESS SMALL MEDIUM LARGE

WHERE A BUSINESS OPERATES LOCAL NATIONAL INTERNATIONAL/MULTI-NATIONAL

BUSINESS SECTORS PRIVATE SECTOR PUBLIC SECTOR VOLUNTARY SECTOR

SECTORS OF INDUSTRY PRIMARY PRODUCTION SECONDARY PRODUCTION TERTIARY PRODUCTION

CHAIN OF PRODUCTION Link between different businesses involved in making a product Primary sector business/s Secondary sector business/s Tertiary sector business/s AT EACH STAGE VALUE IS ADDED TO THE PRODUCT – due to time/materials used

OTHER TERMS NEEDS AND WANTS  Need – something essential to survive  Want – extra items that make life easier/more enjoyable PRODUCT-LED OR MARKET-LED BUSINESS?  Market-led: uses market research to decide what to develop/produce/sell  Product-led: business makes what it is good at and persuades customers to buy

UNIT 2 BUSINESS AIMS

WHY DO ORGANISATIONS EXIST? To make profit To provide a service To develop an idea For charitable reasons

ENTREPRENEURS Risk-takers Go with an idea – develop a business May take a lot of time

MANAGEMENT SKILLS Communication Delegation Decision Making Organisational Problem Solving People skills Negotiating Assertiveness

MANAGEMENT STYLES Autocratic Manager makes decisions, manager has complete control; little/no input from workers Democratic/Consensual Staff involved in decision making

BUSINESS AIMS/OBJECTIVES Aims will depend on type of business and sector May include To survive To make profit(or maximise profit) To increase market share To grow (measure by turnover; profit; no of employees; outlets etc) To lead the field To produce quality goods/services Efficiency – do things best possible way – minimise use of resources and waste To improve conditions

STAKEHOLDERS Person/group with an interest in how a business/organisation is run/managed  Managers  Owners/Investors/shareholders  Lenders  Creditors  Customers  Community  Employees  Government; tax authorities

SOCIAL COSTS AND BENEFITS Social costs are NEGATIVE effects  Air pollution  Noise pollution  Water pollution  Traffic congestion  Health effects Social benefits are POSITIVE effects Money in the community – wages/salaries Increased population - improved services eg schools, roads

SOCIAL RESPONSIBILITY WHEN A BUSINESS CARES FOR SOCIAL ASPECT OF ITS AREA  Eg for people; environment  Customer relations; fair wages to workers; no animal testing; Environmental policy; recycled materials; recyclable packaging  Pressure groups; government legislation

ECONOMIC COSTS AND BENEFITS Economic benefits More money for workers Increased spending Better standard of living Lower unemployment and social security payments Economic cost is OPPORTUNITY COST – what is ‘given up’ in order to have something (Choice)