The business context

Why start a business?
1. The desire to be your own boss
2. Personal fulfilment
3. To provide a product or service
4. Making money
5. Lack of alternatives
6. What does it take to be successful?
  1. Perseverance
  2. The desire and willingness to take the initiative
  3. Competitiveness and strong need to achieve
  4. Self-confidence
  5. Toughness
The main types of business organisation
1. Sole traders: These are easy to set up, suitable for small businesses and the owner gets to keep all the profits. However has unlimited liability which the owner is personally responsible for and it is also harder to raise money.
2. Partnerships: These have more people to share the work with and more money can be invested, but they have unlimited liability and making decisions can be hard with two people.
3. Private limited companies: These are companies owned by shareholders, which makes it easy to keep control of the business because they control the shares and they have limited liability. However they're harder to set up and have more paperwork.
4. Public limited companies: easier to raise money for, but individual shareholders have little say in how the company is run and it can be hard to keep control of the business.
5. Franchises
  1. Benefits and drawbacks to the franchisor: The business carries less risk because the franchisor does not own each individual shop, however they have less control over recruitment and quality control.
  2. Benefits and drawbacks to the franchisee: They also have less risk because they are buying into an existing, popular brand, however they are at risk from the actions of the franchisor and can suffer through no fault of their own.
6. How are businesses organised?
  1. Hierarchical structures: These have the benefits of staff knowing who they're responsible for, communication works better, directors and managers are only responsible for a small number of people and this is better for a larger organisation. However, the chain f command might be too big and this can make communication difficult between the top and bottom of hierarchy, messages can become distorted this way.
  2. Flat structures: These have fewer level of management and benefit from a smaller chain of command, however those who remain have a wider span of control.
7. Business success and failure
  1. Business objectives
    1. Profit: the most important objective.
    2. Survival
    3. Increase market share, this means the firm is performing better than it's rivals.
    4. Customer satisfaction.
  2. Reasons for business success
    1. Having products that customers want to buy
    2. Charging a price that customers are happy to pay
    3. Staying ahead of the competition
    4. Having a good relationship with suppliers and customers.
    5. A good location and staff.
Customer satisfaction and competitiveness
1. Methods of measuring customer satisfaction
  1. Monitoring the number of customer complaints
  2. Customer panels or interviews
  3. Questionnaires
  4. Website feedback
  5. Secret shoppers
  6. Benchmarking
2. The impact of poor customer service fro customers
  1. Time spent waiting for help and advice
  2. Sales staff who do not know enough about the products they sell.
  3. Poor quality or misleading information
  4. Products take longer to deliver than expected
  5. Customers shop elsewhere instead
3. Methods of monitoring competitiveness
  1. Prices: if two products are identical then customers will choose the cheapest.
  2. Market share: estimating this accurately can lead to a better understanding of the market.
  3. Market research, this can be field research or desk research
4. How to become more competitive
  1. Reduce the price of existing products: this is a good short-term way to make products more competitive because more customers will buy them.
  2. Improve promotion of existing products: adverts can persuade people to buy your product.
  3. Develop new and improved products: these new products will be better quality then your competitors.
  4. Improved levels of customer service: this makes the business more attractive to customers.
The legal framework
1. Employment law
  1. Pay and conditions
    1. All employees must be paid for doing the same work of equal value
    2. All employees are entitled to paid holidays and sick pay
    3. Employers must provide a safe working environment
    4. Employers must not discriminate
    5. Employees are entitled to belong to a trade union
  2. Leaving employment
    1. Employers can make an employee redundant, however they must give sufficient reasons and notice for this and give them redundancy pay.
    2. Employers can dismiss a worker for breaking company rules, however thy must follow a discipline procedure, it starts with a verbal warning, then a written warning and finally dismissal.
2. Health and safety
  1. Health and safety at work act of 1974
    1. Employers must carry out a risk assessment
    2. Appointing health and safety officers
    3. Keeping an accident book
  2. Display screen equipment regulations 1992
    1. Provide information to employees in the safe use of a computer.
    2. Provide regular eye-sight tests for employees.
    3. Plan a daily routine for workers
    4. All equipment and workstations used must be safe to use.
3. Consumer protection
  1. Product descriptions must be accurate
  2. All advertising must be accurate
  3. All goods must be safe to use
  4. Clear information must be given about the product
4. Data protection
  1. Data protection act
    1. Fairly and lawfully processed
    2. Adequate, relevant and not extensive
    3. Security
    4. Not kept longer than necessary.
  2. Copyright, designs and patents act
    1. Making unauthorised copies of copyrighted computer data is illegal.
    2. Making small changes to copyrighted material and claiming it is your own is illegal.
    3. Copy and pasting from a copyrighted source is illegal.
  3. Computer misuse act
    1. Gaining access to a computer without permission
    2. Gaining access to a computer with the intention of committing a crime
    3. Making unauthorised changes to a computer system.
Environmental proection
1. Business implications
  1. Businesses are required to reduce the amount of waste they produce
  2. Businesses must participate in sustainable development, they must expand whilst not causing problems for future generations
  3. Manufacturers are likely to charge a higher cost for these regulations.
2. Business ethics
  1. These are moral principles that help a business to behave.
  2. Social responsibility: investing in local communities and working with them, responsible advertising, designing and using products that reduce environmental problems, good employment practises
  3. Operating this way will be more expensive and time consuming, however businesses gain good publicity and image.

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The business context

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