People in Business (Part 1)

What is a business?

A business is an organisation that is set up to provide goods and services.

Stakeholder

A stakeholder is anyone affected by the day to day running of a business.

Who are the main stakeholders in a business?

Entrepreneurs, interest groups, consumers, suppliers/service providers, producers, employees, employers

Entrepreneur

An entrepreneur is someone who spots a gap in the market, takes a risk and sets up a business. They can either make a profit or a loss, depending on how successful their enterprise is.

Examples of entrepreneurs

Elon Musk - founder of Tesla, Brian Lee - found of Chopped, Zhang Yiming - founder of TikTok

Personal Risk

The risk that if the business fails they will lose their confidence/motivation to succeed or reputation in the market.

Financial Risk

The risk that if the business fails they will lose any capital they have invested.

The role of the investors

These are the people who put money into a business in return for an investment payment in the future.

3 ways an investor lends money to an entrepreneur

Debt capital, equity finance, grants

Debt capital

The entrepreneur has to repay the investor all money they have received as well as paying them interest.

Equity finance

The investor buys shares in the entrepreneur’s business. The investor is now known as a shareholder and owns a percentage of the business.

Grants

These are non-repayable sums of money from agencies such as Local Enterprise Offices (LEO’S). The capital does not have to be repaid as long as the conditions for the grant have been met - e.g create 100 new jobs.

The role of the employers

An employer is someone who hires employees to work for them. They usually look after the day to day activities of the business. An example of an employer would be the local Costa of Supervalu.

By law, employers must:

Provide an employment contract, provide proper working conditions, pay agreed wages

Role of employees

An employee is someone who brings their skills/expertise to. business in return for a wage/salary. An example of an employee would be a manager at a local Tesco.

By law, employees must:

Do an honest day’s work, not break the terms and conditions in the contract of employment and accept and carry out reasonable instructions from management.

The role of the producers

A producer is a business that manufactures goods for the market. They take raw materials and produce finished goods. For example Cadbury’s produces chocolate for the market. The producer would not survive without the consumer. Therefore they must provide the consumer with good prices, good service and top-quality products. In competitive markets, if these are not provided by the producer the consumer may choose alternative products/go to the competition.

The role of the suppliers/service providers

These are the suppliers of raw materials and other support services to a business. Examples include suppliers of wheat to bakery or an external accountant. A supplier/service provider can save a business money and provide expertise they do not have.

The role of the consumer

A consumer is somebody who buys a good for their own personal use, e.g buying a new pair of jeans for yourself at H&M. Without the consumer there would be no market. They are the most important business stakeholder. They look for good prices, good service and top-quality products.

Interest Group

An interest group (a group which represents a group/stakeholders with a common objective) seeks to influence decision and policy makers affecting its members, through various actions.

Tactics interest groups use

Organising negative publicity, boycotts of a business’s products or services, lobbying politicians to meet their demands, information campaigns, negotiations

ICTU

Irish Congress of Trade Unions - The ICTU represents almost all trade unions in Ireland. It negotiates national agreements with government and employers. It promotes the principles of trade unionism through campaigns and policy development. It also provides information, advice and training to unions and their members.

IBEC

Irish Business and Employers Confederation - This is a Union for business owners and employers. It represents employers on industrial relations matters with their employees. It also negotiates with the government and ICTU on wage agreements.

Stakeholder relationships

Cooperative, competitive, dependant, dynamic

Cooperative relationship

A cooperative relationship is where both parties are working towards shared goals for mutual benefit. A cooperative relationship is a win-win relationship for each stakeholder.

Cooperative relationship example

An investor wants the entrepreneur to be as successful as possible to earn more money and therefore will help them in any way possible. An entrepreneur wants to be successful so that they can attract investment in the future and therefore works alongside the investor towards a shared goal.

Competitive relationship

A competitive relationship involved two or more rival parties. They both want to be successful but this is impossible. There is only one winner in a competitive relationship. It is known as a win-lose relationship.

Competitive relationship example

Rival producers compete with each other for consumers to choose their products. For example, Cadbury and Nestle both compete with customers for them to pick their brand of chocolate bar.

Dependant relationship

Involves two or more parties that cannot achieve success on their own. The success of one party depends on the actions of the other party. If one fails so does the other.

Dependant relationship example

A dependant relationship exists between consumers and producers. If consumers stopped buying goods then there would be no demand for producers’ products and they would go bankrupt.

Dynamic relationship

A relationship that is likely to change over time.