Download standard grade business management

STANDARD GRADE
BUSINESS MANAGEMENT
REVISION
Unit 1 - Introduction
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What organisations have in common –
Name; aims; resources; image; rules
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Goods/services
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Resources/Factors of Production
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Land (natural resource)
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Labour (human resource)
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Capital (man-made resource)
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Enterprise (ideas, risk-taking)
SOLE TRADER
(One person business)
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Easy to set up
Gets all profit
Makes all decisions
Quick decision making
Local/personal service
Business affairs kept
private
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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
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Additional capital
Shared ideas
Different areas of expertise
Shared workload
Shared responsibilities
Can have sleeping/silent
partners
Business affairs kept private
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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
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Must register a new company:
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Memorandum of Association
Articles of Association
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Capital from shareholders
Shareholders have limited liability
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Accounts are made available
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COMPANIES
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PRIVATE LIMITED
COMPANY
At least 2 shareholders
Minimum £2 starting
capital
Shares not advertised to
general public
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PUBLIC LIMITED COMPANY
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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
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SHAREHOLDERS
Willing to invest to:
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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
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Buying into an existing business
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FRANCHISOR sells rights to a new trader
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FRANCHISEE buys into an established
business – name, products/brand goods,
assistance (training, financial aid etc)
CO-OPERATIVE
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CONSUMER CO-OPERATIVE selling
goods/service cheaper, profits given back to
customers in form of dividend, members have
a vote
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WORKER CO-OPERATIVE a business owned
by workers, all with shares and involved in
decision making
SIZE OF BUSINESS
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SMALL
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MEDIUM
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LARGE
WHERE A BUSINESS OPERATES
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LOCAL
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NATIONAL
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INTERNATIONAL/MULTI-NATIONAL
BUSINESS SECTORS
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PRIVATE SECTOR
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PUBLIC SECTOR
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VOLUNTARY SECTOR
SECTORS OF INDUSTRY
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PRIMARY PRODUCTION
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SECONDARY PRODUCTION
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TERTIARY PRODUCTION
CHAIN OF PRODUCTION
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Link between different businesses involved in making a
product
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Primary sector business/s
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Secondary sector business/s
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Tertiary sector business/s
AT EACH STAGE VALUE IS ADDED TO THE PRODUCT
– due to time/materials used
OTHER TERMS
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NEEDS AND WANTS
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Need – something essential to survive
Want – extra items that make life easier/more enjoyable
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PRODUCT-LED OR MARKET-LED BUSINESS?
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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?
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To make profit
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To provide a service
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To develop an idea
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For charitable reasons
ENTREPRENEURS
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Risk-takers
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Go with an idea –
develop a business
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May take a lot of time
MANAGEMENT SKILLS
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Communication
Delegation
Decision Making
Organisational
Problem Solving
People skills
Negotiating
Assertiveness
MANAGEMENT STYLES
Autocratic
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Manager makes decisions, manager has complete
control; little/no input from workers
Democratic/Consensual
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Staff involved in decision making
BUSINESS AIMS/OBJECTIVES
Aims will depend on type of business and sector
May include
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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
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Person/group with an interest in
how a business/organisation is
run/managed
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Managers
Owners/Investors/shareholders
Lenders
Creditors
Customers
Community
Employees
Government; tax authorities
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SOCIAL COSTS AND BENEFITS
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Social costs are
NEGATIVE effects
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Social benefits are
POSITIVE effects
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Air pollution
Noise pollution
Water pollution
Traffic congestion
Health effects
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Money in the community
– wages/salaries
Increased population improved services eg
schools, roads
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SOCIAL RESPONSIBILITY
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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
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Economic benefits
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More money for workers
Increased spending
Better standard of living
Lower unemployment
and social security
payments
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Economic cost is
OPPORTUNITY COST –
what is ‘given up’ in
order to have something
(Choice)