People in Business Unit 1

Learning Outcomes On completion, you should be able to: 1.3.1 List the main parties and people involved in business 1.3.2 Describe the relationships between people as workers, as trade union members, as managers, as entrepreneurs, as investors, and as customers 1.3.3 Outline non-legislative ways of solving conflict 1.3.4 Outline how a major piece of legislation and the elements of contract law help deal with conflict 1.3.5 Analyse the relationships between people in business (HL) 1.3.6 Illustrate how legislation affects these business relationships (HL) 1.3.7 Describe a possible business conflict and show how the law would be used to solve it (HL)

Objectives of this section What is Business? Who are the People in Business? Interest Groups in Ireland Stakeholders Relationships in Business: Co-operative and Competitive.

What is Business? A business is an enterprise that is set up to provide goods and services to customers. Commercial business – make a profit e.g. PC World Non-commercial – provide a service (not profit motivated) e.g. Fáilte Ireland

People in Business 1. Entrepreneurs A person who takes the initiative and sets up a business with the risk of possible failure e.g. Bill Cullen, Richard Branson

2. Investors Investors give financial support to entrepreneurs. They take the financial risk e.g. Banks, private investors Invest big, make big Invest big, lose big

3. Consumers Consumers purchase goods and services which are provided by entrepreneurs.

4. Producers/Suppliers Producers manufacture goods for the market and supply them to the consumer

5. Employers Employers hire people to work for payment Employers have rights and responsibilities

6. Employee Employees work for their employers and carry out the tasks given to them in return for wages.

7. Service Provider This is a firm or individual who provides a service to others for use in their business or personal life. Banks, insurance companies Communications Marketing Transport

8. Interest Group An interest group is an organisation that acts as a representative body for a group of people with a common interest.

Interest Group Protesting Against Septic Tank and Household Charge http://www.youtube.com/watch?v=nuJ5RNtFW9Q Complete case study – Anti-septic-tank-charge group (Global Business Resource)

People in Business What is a stakeholder? Any individual or group, that has a stake in the business. Who do you consider a stakeholder in a business? What is the difference between a shareholder and a stakeholder?

Analysis of Impact on Stakeholders High Profits Shareholders Management Employees Customers Community Groups Environment Producers

Analysis of Impact on Stakeholders Low Profits Shareholders Management Employees Customers Community Groups Environment Producers

Stakeholders Wants V’s Offers Offers in return Entrepreneurs

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers Honesty Reliability Motivation and hard work

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers Honesty Reliability Motivation and hard work Pay and conditions Training Promotional opportunities

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers Honesty Reliability Motivation and hard work Pay and conditions Training Promotional opportunities Employees

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers Honesty Reliability Motivation and hard work Pay and conditions Training Promotional opportunities Employees Good pay and conditions Secure employment Opportunities to develop

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers Honesty Reliability Motivation and hard work Pay and conditions Training Promotional opportunities Employees Good pay and conditions Secure employment Opportunities to develop Skills and qualifications Hard work and motivation Honesty and reliability

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers Honesty Reliability Motivation and hard work Pay and conditions Training Promotional opportunities Employees Good pay and conditions Secure employment Opportunities to develop Skills and qualifications Hard work and motivation Honesty and reliability Managers

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers Honesty Reliability Motivation and hard work Pay and conditions Training Promotional opportunities Employees Good pay and conditions Secure employment Opportunities to develop Skills and qualifications Hard work and motivation Honesty and reliability Managers Laws that are easy to understand Resources to do their jobs

Stakeholders Wants V’s Offers Offers in return Entrepreneurs Profit and success Finance and support Skilled managers and employees Minimal risk Goods and services Employment and wages Taxes Share in profits Interest on loans Investors Profit on investment Possible share in the ownership Finance Employers Honesty Reliability Motivation and hard work Pay and conditions Training Promotional opportunities Employees Good pay and conditions Secure employment Opportunities to develop Skills and qualifications Hard work and motivation Honesty and reliability Managers Laws that are easy to understand Resources to do their jobs Management skills Ability to lead, motivate and communicate with staff

Stakeholders Wants V’s Offers Offers in return Producers

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers Quality goods and services Fair and affordable prices

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers Quality goods and services Fair and affordable prices Payment for goods/services Loyalty and repeat business

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers Quality goods and services Fair and affordable prices Payment for goods/services Loyalty and repeat business Society

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers Quality goods and services Fair and affordable prices Payment for goods/services Loyalty and repeat business Society Local jobs No damage to local community, wider society or the environment Support and sponsorship

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers Quality goods and services Fair and affordable prices Payment for goods/services Loyalty and repeat business Society Local jobs No damage to local community, wider society or the environment Support and sponsorship Favourable public opinion Socially responsible brand image

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers Quality goods and services Fair and affordable prices Payment for goods/services Loyalty and repeat business Society Local jobs No damage to local community, wider society or the environment Support and sponsorship Favourable public opinion Socially responsible brand image Government

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers Quality goods and services Fair and affordable prices Payment for goods/services Loyalty and repeat business Society Local jobs No damage to local community, wider society or the environment Support and sponsorship Favourable public opinion Socially responsible brand image Government Public opinion on its side Tax revenue for government Goods and services for society

Stakeholders Wants V’s Offers Offers in return Producers Reliable suppliers Loyal customers The highest possible prices Profitable business Products of the right quality Suppliers Reliable customers Payment on time Products and services Customers Quality goods and services Fair and affordable prices Payment for goods/services Loyalty and repeat business Society Local jobs No damage to local community, wider society or the environment Support and sponsorship Favourable public opinion Socially responsible brand image Government Public opinion on its side Tax revenue for government Goods and services for society Tax incentives Grants, business advice and support Infrastructure and services

Relationship between Stakeholders The relationship between stakeholders in a business may be described as being either co-operative or competitive. Co-operative: To co-operate means to act in a manner which is of mutual benefit to all concerned i.e. win/win situation. Here, a harmonious relationship exists between the stakeholders because they are in agreement with each other. Competitive: To compete means to pursue different aims i.e. win/lose situation. Here, a difficult relationship develops between the stakeholders because they are in disagreement with each other Relationships are dynamic i.e. ever-changing

Relationship between Stakeholders Investor and Entrepreneur Co-operative Relationship: Can rely on each other: This is when the entrepreneur relies on the funds of the investor to start or expand his business and when the investor relies on the entrepreneur to provide a good investment. Good return: This is when the entrepreneur puts the investors funds to good use and the investor is happy with the return he is receiving on his investment

Relationship between Stakeholders Investor and Entrepreneur Competitive Relationship: Problem with Return: This is when the investor is unhappy with the return he is receiving and threatens to withdraw his funds. Problem with Restrictions: This is when the investor imposes restrictions on how the entrepreneur can use the funds. Problem with Information: This is when the investor looks for more information about the business than the entrepreneur wishes to disclose.

Relationship between Stakeholders Entrepreneur and Supplier Co-operative Relationship: Can rely on each other: This is when the entrepreneur relies on the supplier to provide goods or materials, on time and at a reasonable price, while the supplier relies on the entrepreneur to provide a market for his products.

Relationship between Stakeholders Entrepreneur and Supplier Competitive Relationship: Problems with prices: This is when the entrepreneur tries to get goods at the lowest price and best terms, while the supplier will try to maximise prices and terms in his favour. Problem with delivery: This is when delivery deadlines are missed. Problem with payment: This is when the supplier does not get paid on time. Problem with quality: This is when the entrepreneur is unhappy with the quality of the materials received from the supplier.

Relationship between Stakeholders Employer and Employee Co-operative Relationship: Can rely on each other: This is when the employee relies on the employer to provide him with a job, while the employee relies on the technical or specialist knowledge of the employee. Fair wage: This is when the employer pays a fair wage to the employee and offers bonus schemes, productivity deals and profit-sharing schemes as rewards. Trade union recognition: Management must recognise and accept the rights of workers to join a trade union. Empowerment: This is when the employer gives the employee real responsibility to make decisions. Training: Management recognise the importance of training to improve skills.

Relationship between Stakeholders Employer and Employee Competitive Relationship: Wages: When the employee looks for a pay rise, which the employer refuses to pay. Low work rate: This is when the employee becomes lazy, his work rate slows down or there is a problem with absenteeism or lateness. Lack of involvement: This is when the employees want to be involved in decision making but the employer fails to communicate with them. Redundancy: This is when the employer needs to downsize the workforce and must let people go.

Relationship between Stakeholders Producer and Consumer Co-operative Relationship: Reliable goods and services: This is when the consumer relies on the producer to provide the goods and services he requires, and when the producer relies on the consumer to buy his goods to keep him in business. Loyalty: When the consumer is happy with the goods supplied and the prices charged. Good complaint procedure: When the producer deals with consumer complaints quickly and effectively. Good Listening: When producers listen to consumers and act on their comments, suggestions and complaints.

Relationship between Stakeholders Producer and Consumer Competitive Relationship: Price discrepancy: This is when the consumer looks for low prices and high quality, while the producer wants high prices and low costs. Bad service: This is when the producer provides goods of poor quality, late delivery or poor after-sales service. Protest: When consumers become unhappy about some aspect of the business e.g. Pollution, child labour, and decide to boycott the products of the business.

Relationship between stakeholders 5. Competitive Businesses (in similar businesses) Co-operative Relationship Generic marketing: promotion of cheese products Container sharing: sharing costs when exporting goods Promoting economic development: promote tourism

Competitive Relationship Price wars: lower selling prices e.g. Tesco and Superquinn Quality: better quality goods and services provided This relationship is good for the consumer and also keeps businesses efficient.

Exercise: Global Business Page 12 Question 2 (a) and (b)

Page 12 Question 5 Question: Describe a competitive relationship and a co-operative relationship between two producers in the same line of business. Use appropriate examples to support your answer. Answer Producers are the makers or manufacturers of goods. They combine resources to transform raw materials into finished products that can be supplied to the consumer e.g. Volkswagen and Toyota.

Competitive relationship A competitive relationship between two producers in the same line of business means each producer is pursuing different aims/objectives in an effort to achieve particular goals at the expense of the other i.e. it is a win/lose situation. This is beneficial for the consumer as they receive: Improved quality in goods/services Improved customer Service Better choice of products Better value for money

Examples Producers in the same line of business, e. g Examples Producers in the same line of business, e.g. two car manufacturers (or two restaurants/supermarkets etc), may compete on prices of goods and services, quality, sales and the recruitment of labour. Co-operative relationship A co-operative relationship exists when producers act in a manner which is of mutual benefit to all concerned i.e. it is a win/win situation.

Examples Producers in the same line of business sometimes get together and co-operate with each other to protect their specific industry against an outside threat/to encourage economic development and to create jobs for the benefit of the community.  E.g. BMW has worked with General Motors and Chrysler on hybrid technology. They also shared costs of developing small four cylinder engines with Peugeot 1 @ 7 marks (4 + 3) 1 @ 8 marks (4 + 4) (LC HL 2008: Section 3, Part 1, Q1a: 15 marks)