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.
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.
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.
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.
Franchises
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.
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.
How are businesses organised?
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.
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.
Business success and failure
Business objectives
Profit: the most important objective.
Survival
Increase market
share, this means
the firm is
performing better
than it's rivals.
Customer satisfaction.
Reasons for business success
Having products
that customers
want to buy
Charging a price that customers
are happy to pay
Staying ahead of the
competition
Having a good relationship
with suppliers and
customers.
A good location and staff.
Customer satisfaction and competitiveness
Methods of measuring customer satisfaction
Monitoring the number of customer complaints
Customer panels or interviews
Questionnaires
Website feedback
Secret shoppers
Benchmarking
The impact of poor customer service fro customers
Time spent
waiting for
help and
advice
Sales staff who do
not know enough
about the products
they sell.
Poor quality or misleading information
Products take longer to
deliver than expected
Customers
shop
elsewhere
instead
Methods of monitoring competitiveness
Prices: if two products are
identical then customers
will choose the cheapest.
Market share:
estimating this
accurately can
lead to a better
understanding
of the market.
Market research, this can be field
research or desk research
How to become more competitive
Reduce the price of existing products: this is a
good short-term way to make products more
competitive because more customers will buy
them.
Improve promotion of existing
products: adverts can persuade
people to buy your product.
Develop new and improved products:
these new products will be better quality
then your competitors.
Improved
levels of
customer
service: this
makes the
business
more
attractive to
customers.
The legal framework
Employment law
Pay and conditions
All employees must
be paid for doing the
same work of equal
value
All employees are
entitled to paid
holidays and sick
pay
Employers must
provide a safe working
environment
Employers must not discriminate
Employees are
entitled to belong to a
trade union
Leaving employment
Employers can make an employee redundant, however
they must give sufficient reasons and notice for this and
give them redundancy pay.
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.
Health and safety
Health and safety at work act of 1974
Employers must carry
out a risk assessment
Appointing health and safety officers
Keeping an accident book
Display screen equipment regulations 1992
Provide information to
employees in the safe use of a
computer.
Provide regular
eye-sight tests for
employees.
Plan a daily
routine for workers
All equipment and
workstations used must be
safe to use.
Consumer protection
Product
descriptions
must be
accurate
All advertising
must be
accurate
All goods must
be safe to use
Clear
information
must be
given about
the product
Data protection
Data protection act
Fairly and lawfully processed
Adequate,
relevant and
not extensive
Security
Not kept longer than necessary.
Copyright, designs and patents act
Making
unauthorised
copies of
copyrighted
computer
data is
illegal.
Making small changes to
copyrighted material and
claiming it is your own is
illegal.
Copy and pasting from a copyrighted source is illegal.
Computer misuse act
Gaining access to a
computer without
permission
Gaining access to a
computer with the intention of
committing a crime
Making
unauthorised
changes to a
computer system.
Environmental proection
Business implications
Businesses are required to reduce
the amount of waste they produce
Businesses must participate in
sustainable development, they must
expand whilst not causing problems
for future generations
Manufacturers
are likely to
charge a higher
cost for these
regulations.
Business ethics
These are moral principles that help a business to behave.
Social responsibility: investing in local communities
and working with them, responsible advertising,
designing and using products that reduce
environmental problems, good employment
practises
Operating this way
will be more
expensive and time
consuming,
however businesses
gain good publicity
and image.