A292

A292

Business Activity
1. Stakeholders
  1. Internal
    1. Those with a direct interest in the business.
      1. They influence the business through the way they make decisions and work
  2. External
    1. They hugely influence small businesses mainly, i.e. customers not buying, suppliers giving bad quality and government setting tax too high.
  3. Sometimes stakeholders aims conflict, this is because they want different things.
    1. For example, owners want to maximise profits whereas employees want higher pay and obviously higher pay will decrease the profit margin, as a result they must compromise
2. Aims and objectives
  1. The 4 main aims and objectives are: Profit, Increased market share, Growth and Survival (PIGS)
    1. Within the first year, all businesses aim for is survival, they don't want a huge profit - they just don't want to go bust.
  2. An aim is a long term 'wish', whereas an objective is shorter-term and more precise.
3. Social Enterprise - An organisation with social objectives, aimed at stakeholders such as members, customers and communities.
  1. Co-operative - a group that shares in a business to insure a fair deal for members
    1. Co-operatives and mutual societies want to make sure that their members (customers and employees) get a fair deal.
  2. Mutual society - a society set up to provide benefit to all its members
    1. A mutual society is a type of co-operative - they were set up to provide members with financial health.
  3. Charity - a business that tries to do the most good for its chosen cause.
  4. Unlike a charity, that raises fininace from donations, a social enterprise acts like a real company, selling products and providing services in order to raise the finance needed to progress and it will donate all of its profits to the desirable cause.
4. Sectors
  1. Primary sector
    1. The primary sector is the first stage of the production process that deals with raw materials, e.g. fishing, farming, forestry, mining quarrying and drilling
  2. Secondary sector
    1. This is the second stage of the production process. This is involved with taking the raw materials from the primary sector and using them to manufacture finished goods. some examples of businesses in the secondary sector are car manufactures, steel works and builders.
  3. Tertiary sector
    1. This is the third and final stage of the production process. All of the businesses in this sector are service providers, this is how the goods made in the primary and secondary sectors are sold to consumers.
      1. Examples of businesses in the tertiary sector are retailers, transport, banking and communications.
Business ownership and location.
1. Types of ownership
  1. Sole trader
    1. This is the simplest structure of ownership - it is a business that's owned and run by one person and has unlimited liability.
  2. Partnership
    1. Partnerships are agreements between two or more people to share the responsibilities, organisation , workload and profits (or lossess) and also has unlimited liability
  3. Private limited companies (LTD)
    1. LTD's have the benefit of limited liability, however as well as this, it could also bring problems such as intorducing more stakeholders with diffrent aims and objectives,
      1. As an LTD, the company has the ability to sell shares, but only to friends and family and only if the rest of the shareholders agree.
  4. Public limited companies (PLC)
    1. Most LTDs become a PLC in order to raise large amounts of capital
      1. This can be done because as a PLC you have the ability to sell shares on the stock exchange - this is beneficial as it's a good way to raise a large amount of finance however because you can sell to the general public, shareholders may put their own intersts above the interests of the company.
        Every year, each shareholder is invited to attend the Annual General Meeting (AGM), although this is not required it is a way to help influence your ideas upon the company.
  5. How to set up a business
    1. Firstly, you draw up a memorandum of association, next you draw up articles of association, then shares are issued before you send these details to the Companies House, after that you will get your certificate of incorporation and you can begin trading.
The workforce in business
1. Recruitment and Selection
  1. Training and Appraisal
    1. Training is making sure that the works have the knowledge and skills necessary to do the job. It's mandatory as it enables the business to operate as efficiently as possible.
      1. Development is different - training benefits the the business whereas development benefits the worker more. The process of development is where the worker develops their skills and knowledge and may involve for example professional examinations and or futher study.
      2. The first time the worker comes to the business, they will experience induction training, this will conist of rules and regulations, health and safety measures and they will be able to get aquainted with their colleagues this is beneficial because it means that once the worker arrives, they know what to do and who to talk to should they need anything.
      3. There are two types of training: on-the-job training and off-the-job training.
        On-the-job training is where the employee will be trained internally, on site. This is beneficial because they will be farmiliar with the equipment, the technique and they will know what is expected off them, as well as this it's usually cheaper so for a business this is perferable. A drawback to this is if the mentor is being lazy, the trainee may copy their mistakes and pick up the wrong technique thinking that's how it's done.
        Off-the-job training is where the worker is trained externally - this usually takes place on specialised courses and as a result, it is often more expensive. However once they are trained and qualified, they may bring new ideas to the business and are usually better trained.
    2. Appraisal is the process whereby you see how well a worker is doing. It's an opportunity to exchange views with their superior and can result in a possible reward or even lead to promotion.
      1. Businesses now expect employees to keep retaining and improving upon skills they already have - this is called lifelong learning.
  2. Recruitment is the process by which a business finds new employees.
    1. Recruitment needs to take place when a need for new staff is identified, there are many reasons for this, such as the expansion of the business, old staff leaving or the business requiring new skills.
    2. There are two types of recruitment, internal and external recruitment - internal is offering the job to someone already within the business i.e. promotion and external is advertising the job for people outside of the organisation to apply.
      1. If the business does choose to recruit, the process is as follows, first you must advertise the job, within this you must contain a job description - exactly what will the worker be doing? as well as that, you need a person specification - this will contain the skills required for the person to do the job. sfter that, the HR department will look at the applicants and short list the best and most suited candidates. Next there will be an interview process, a person will be chosen and they will finally receive an appointment to do their induction training and will then begin to work.
  3. Payment methods
    1. Piece rates reward manufacturing workers for the number of items made, this will encourage speed but at the expense of quality.
    2. Time rates reward the people who work more - this is where the worker is payed an amount per period, usually hourly and is common in weekly wages.
    3. Commission is a reward pay for increased sales, it's usually a percentage of the sales you make, you get to keep and is generally a small percentage on top of your monthly basic pay.
2. Motivation
  1. There are two methods of motivation: monetary and non-monetary.
    1. Monetary methods are like bonuses and rewards, this will motivate employees as they will all want to win the bonus, but can result in de-motivation if employees are overlooked.
    2. Non-monetary methods include fringe benefits - this is for example a company car or a gym membership. As well as that, there's job rotation, this is giving workers multiple different things to do so they're kept interested. There's job enrichment, this is similar to job enlargment as you're giving the employee more freedom and responsibility, if they feel valued and trusted they're more likely to work harder.
Business organisation
1. A chart can be made to show how a business is organised, like the one above.
  1. The number of subordinates below each person can be measured and is known as the span of control.
    1. There are two kind of structures: tall and flat. The one used here is tall, there are lots of layers and having a flat structure means one person is in charge of a lot more people. For communication, a flat structure is better because they all report to one person, a clear message is given but if it has to pass through all of the layers, things may be changed and it will be less efficient. For the workers, a tall structure is better, this is because if you're at the top, you're not in charge of too many people, you can cope and if you're at the bottom, there are a lot of opportunities for promotion.
2. There are two types of growth a business will experience, one is internal and one is external.
  1. Internal growth happens from within the company, this usually moves at a gradual pace and is done by increasing sales, using new technology, widening the product range resulting in you expanding into different markets and winning a larger share of its main market.
  2. External growth is where a business expands by joining another business in a merger, or even a hostile takeover -this will result in a larger market share and a more well known brand name leading to an increase in sales and an increase in revenue.
3. Communication
  1. Communication consists of 5 parts: the sender, the message, the medium, the receiver and feedback.
    1. Formal communications have a certain format and will be used for certain messages, an example is an AGM.
    2. Informal communications can take place at any time using any medium. This can be as effective as formal communications and can be done efficiently by the use of IT.

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