Business studies

chap 1

What are the two business sectors?

Public and private

What is the public sector?

Businesses that are owned by the government and have been established to provide collective goods and services to the people living in country

What are collective goods?

Infrastructure of the country. Eg government schools and hospitals

How are public sector businesses funded?

They are funded by taxes

What is the private sector?

Businesses owned by private entrepreneurs and have been established to satisfy consumer needs and wants

How are private sector businesses funded?

The entrepreneur provides the capital by using their own money or borrowed capital

How is competitive advantage created in the private sector?

Good quality product and competitive pricing

What is the private sector split into?

The formal and informal sectors

What is the formal sector?

-Businesses that are administered according to the law.

-They pay taxes and directly contribute to the GDP.

-They have a fixed location

What is the informal sector?

-Businesses that do not adhere to legal requirements

-They do not pay taxes and do not directly contribute to the GDP

-They do not have a fixed location

How do businesses in the informal sector contribute to the GDP and the countries economy?

-they buy raw materials from the formal sector

-if their business grows enough, they will be able to go into the formal sector

-it helps alleviate poverty; people spend profit in the formal sector

What are the economic sectors?

primary, secondary, tertiary, quaternary, quinary

What is the primary sector?

-Harvesting of raw materials from the earth like farming and mining.

-involves lots of manual labour and machines can replace these jobs

What is the secondary sector?

Materials from the primary sector are manufactured into goods to be sold in the tertiary sector like car and bottle manufacturers

What is the tertiary sector?

Finished good are sold to the relevant target markets like retail stores and entertainment

What is the quaternary sector?

Intellectual and knowledge based activities aimed at future growth like education and scientific research

What is the quinary sector?

Decision making at the highest level of society. These decisions have a big impact on society and economic conditions like government decisions

What is a business?

The specific processes that add value to an economic society and to a particular country in which it operates

What are the characteristics of a successful business?

-strong leadership

-competitive advantage

-satisfies consumer needs and wants

-uses factors of production in a sustainable manner

-responsible, accountable and transparent

What are the important objectives of a business?

-survival

-profitability and growth

-social responsibility

-technological development

-employee development and relationships

-competitive advantage

-productivity and efficiency

What is survival?

A business must be aware of external threats and opportunities and the potential impacts these factors may have on the business. Planning for the future through the vision is crucial for survival w

What is profitability and growth?

-Financial success of the business and this is achieved by managing resource allocation and monitoring overall direction of the business.

-In order for a business to grow it has to generate healthy and increased profits, increase physical assets and develop skills

What is productivity and efficiency?

-productivity is the ability of the business to achieve the maximum output with minimum input

-efficiency is the ability to satisfy consumer needs and wants at the right time, place and price

What is competitive advantage ?

Achieving an overall advantage over competitors. This is achieved by having better quality, price technology, service levels, location and use of resources

What is employee development and relationships?

Employees are valuable assets to a business because motivated and committed employees will help the business to increase productivity and maintain competitive advantage.

What is technological development?

Technology can be used to differentiate a business from another. This is things like online shops and online banking

What is social responsibility?

The business must act in an accountable and ethical manner even in activities where profit is not the main driving force. It can build long term relationships with society. It is important in South Africa because of the past inequalities.

What are the business environments?

Micro, market and macro

What is the micro environment?

All the elements internal to the business which could affect the overall performance of the business. The business has full control over the micro environment

What are the 8 business functions?

-general management

-purchasing

-production

-human resources

-public relations

-administration

-financial

-marketing

What is general management?

Responsible for developing a strategic plan for the business in order to improve overall performance and profitability. It is responsible for developing the vision, mission, goals and objectives and the business strategy

What are the management tasks?

-planning

-organising

-leading

-co ordination

-delegating

-motivating

-decision making

-control

-communication

What is purchasing?

This function ensures that the business ( and all its departments ) has the necessary resources to attain its objectives. This function must choose the supplier carefully and ensure it is reliable.

What is production?

It combines the factors of production in order to make a product that satisfies consumer needs and wants. The product must be safe, have after sales care, durable and reliable

What is marketing?

It conducts market research to determine what is in demand. It will use different marketing techniques to grow market share. This include advertising, sales promotion and surveys

What is financial function?

It ensures that the business has sufficient capital that it is used in the most productive manner. The types of capital are fixed and working capital and it can be own or borrowed

What is administration?

It is responsible for collecting data and processing it into meaningful and accurate information for decision making.

What is Human Resources?

It is responsible for the overall manpower of the business. It must ensure employees are trained and qualified for their job.

What is public relations?

It strives to improve the overall image or brand of the business.

What are the addition business functions?

-Risk management- identifying and monitoring risks

-Management information systems- ensuring necessary technology is available when needed

What are internal resources?

Resources needed by the business in order to function correctly. This is the factors of production

What is business policy?

Rules and regulations that give direction to different functions and create a frame work. These policies must be clearly stated and understood by all employees wh

What is business culture?

Beliefs and values in the business. They direct behaviour and attitudes of internal stakeholders. A positive business culture leads to teamwork and synergy.

What is business structure (organisational culture)?

The way Human Resources, authority and responsibility have been arranged to ensure all components work together to form a systemic whole.

What is the market environment?

The elements external to the business. The business cannot control these but they can influence them.

What are the elements of the market environment?

-suppliers

-competitors

-consumers

-strategic alliances

-intermediaries

-NGOs

-industry regulators

What are suppliers?

A business is dependant on its suppliers for materials and services required for the manufacturing of the product or service to be sold by the business

What are consumers?

People that purchase the businesses good/services

What are competitors?

Companies that sell the same/ similar products to the same target market as the businesswh

What are strategic alliances?

When two or more businesses decide to join forces to take advantage or opportunities in the market

What are intermediaries?

Middlemen that form a link between the business and the consumers

What are NGOs?

Non profit businesses that focus on improving issues in society.

What are industry regulators?

Groups that provide guidelines to the businesses on how to act to ensure that they are acting in an ethical manner

What is the macro environment?

It is external to the business. The business has to control over this environment and can only respond.

What are political factors?

Political developments within a country or in another country that have an affect on the business. Ie lockdown

What are economic factors?

Factors such as inflation, exchange rates and interest rates that affect the business. Ie it can affect selling price because of cost price

What are social factors?

Social factors have an impact on the standard of living, quality of life and disposable income of communities. Ie poverty, HIV and crime

What are the technological factors?

New technology is constantly being developed at a rapid rate. Ie it can give the business a competitive advantage or it can be a threat when it becomes outdated

What are legal factors?

Laws within a country. Ie labour relations act