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What is part of the business chain?
primary, secondart, tertiary and quaternary
Goods
Tangible products that we can take home
Services
Intangible and can’t take them home
What is a private sector
Firms/businesses owned and controlled by individuals.
Public sector?
Firms/businesses controlled by government
what is it called when a firm/business goes from public to private?
privatisation
Customer?
Purchases and pays for product/service
consumer?
ultimate user of product
what types of goods are there?
Consumer goods and capitol goods
What are consumer goods?
Sold to an individual and are long lasting
What are capitol goods?
Purchased by other businesses (tools, computers etc)
Steps of starting up a business?
Organising the basics
Researching the market
planning the business
establish legal requirements
raising the finance
Testing the market
Advantages of setting up a business?
easy to set up
Can be based on hobby
Being your own boss
Privacy (competitors don’t know whats happening)
Disadvantages of setting up a business?
Unlimited liability
Hard to raise finance
No continuity
Work load is a lot
May need to learn new skills
Challenges businesses may face (organisations)
Inappropriate location, suppliers were unreliable
Challenges businesses may face (market research)
Research poorly done, inappropriate target market
Challenges businesses may face (Business plan)
Plan didnt convince, goals were too vague
Challenges businesses may face (legal)
labour laws not adressed, tax laws not adressed
Challenges businesses may face (finance)
Raising money to difficult
Challenges businesses may face (the market)
launch failed, success limited
Profits=
total revenue-total costs
Most common profit based organisations
sole traders, partnerships, privately held companies or cooperations, publicly held companies or cooperations
Sole Trader main features:
owns and runs the business
unlimited liability
No legal distinction between individual and business
finance usually limited
has privacy (declaring finance)
Sole Trader advantages
control over decisions
flexible work hours
privacy
Sole Trader disadvantages
stress
competing against established businesses
unlimited liability
lack of capital
Lack of continuing
Partnership main features
owned and managed by more than 1 person
finance more available
“sleeping partners”
Partnership advantages
different skills and qualities
more expertise
more chance of continuing
access to more finance
Partnership disadvantages
each partner unlimited liability
may disagree on decisions
profits must be shared
no one has complete control
how can businesses become comapanies?
businesses and owners are legally separated
advantages of being share holder?
price of share may increase
limited liability
disadvantages of being share holder?
share price may decrease
may have no meaning in decisions
when businesses decide to become companies they either become…
privately held companies or publicly held companies
who can privately held companies share shares to?
friends, family, associates.. (roughly 20 people)
who can publicly held companies share shares to?
to everyone
Main features of a company
shareholders own but dont necessarily run business
details of company are public
business and owners are seen as separate
Advantages of a company
finance normally more available
investor has limited liability
continuity
disadvantages of a company
can take time and cost for legal requirements
selling shares doesnt always get desirable amount
loss of privacy
limited control on who buys shares
what does “social enterprise” mean
has a social purpose
Do for-profit social enterprises have a main focus on making profit?
only if it doesnt affect the companies social purpose
what are cooperatives?
type of business owned and run by individuals whos objective is to provide essential service for the benefit of the members
features of for-profit social enterprises?
profit important but not priority
collaboration between business and local community
operates the same as any other business
advantages of for-profit social enterprises
strong communal identity ecists
stakeholder community benefits
disadvantages of for-profit social enterprises
capital may not be enough for growth
decision making can be complex
features of non-profit social enterprises?
profits arent generated
aim to make surplus rather than profit
donations important
aim of charities (ngos)
provide as much relief as possible for those in need
focus on those who aren’t able to help themselves
advantages of non-profit social enterprises
help people/causes in need
can create conversations in community
enhance spirit in community
disadvantages of non-profit social enterprises
intense lobbying
can have employees that have passions which ill serve organisation
funding can be irregular
Vision statement
-outlines business aspirations in distant future
-no actual targets that need to be realised
what do we want?
mission statement
-outlines businesses values and purpose
-How vision will be achieved
why are we doing what we are doing?
Aims of a business are…?
long term goals, what they want to achieve in the future
where are all the aims summarised?
in the vision statement
what are objectives?
goals showing how business will achieve aims and reach vision
where will objectives be summarised
Mission statement
common business objectives?
strategical, tactical, operational
what do strategical objectives include?
long-term primary objectives, affect whole organisation (eg growth, image)
what do tactical objectives include?
short-term secondary objectives, affect segment of organisation, specific goals guiding daily functioning of business (eg sales revenue maximisation)
what do operational objectives include?
day-to-day goals
What do SMART objectives stand for?
Specific
Measurable
achievable
relevant
time
changes in external environment could include?
political, environmental, social, economic, technological, ethical, legal
why organisations set ethical objectives:
customer loyalty
positive image
positive work environment
increasing profits
Impact of setting ethical objectives:
business itself - more money long run
competitors- maintain market position, competitors may have to respond
suppliers- buying from ethical suppliers
customers- more loyalty and trust
local community - relationship normally improves
government- recognising ethical businesses
what does SWOT analysis help do…
help set business objectives
What does Ansoff Matrix look at?
growth potential of a business in terms of market and product.
Market penetration (low risk)
Increase market shares (same product in same market but more sales)
Familiarity with market
Market development (medium risk)
New distribution channel (eg overseas)
Familiarity with product
Product development (medium risk)
product extension/development,
existing market
Diversification (high risk)
No familiarity
Note
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