business management

nature of a business

a business is an organisation that uses resources to meet the needs of customers by providing a product or a service that they demand

primary sector

businesses engaged in farming, fishing, oil extraction and all other industries that extract natural resources to be processed or used by other firms

secondary sector

business that manufacture and process products from natural resources, including furniture, brewing, baking, clothing.

tertiary sector

businesses that provide services rather than goods, such as retail, healthcare, education, and finance.

quaternary sector

businesses focused on knowledge-based services, including research, information technology, and consulting.

entrepreneurship

the process of starting and running a new business, typically involving risk-taking and innovation to develop products or services.

challenges for starting up a business

include securing funding, developing a business plan, understanding the market, and navigating legal requirements.

opportunities for starting up a business

overcoming unemployment, being independent, improving standard of living

private sector

refers to the part of the economy that is run by private individuals or companies, rather than by the state. It includes businesses that are owned and operated for profit.

public sector

the part of the economy that is controlled by the government and provides services to the public.

sole traders

businesses owned and operated by a single individual, who is personally liable for debts and has full control over operations.

partnerships

business structures where two or more individuals share ownership, responsibilities, and profits. Each partner may be liable for the debts incurred by the business.

privately held companies

businesses owned by private individuals or groups, not publicly traded on the stock exchange.

publicly held companies

businesses whose shares are traded on public stock exchanges, allowing ownership to be distributed among the general public.

private sector companies

businesses that operate for profit and are owned by private individuals, groups, or organizations, as opposed to the government.

public sector companies

businesses that are owned and operated by government entities, providing services or goods for public welfare and are funded through taxation.

cooperatives

businesses owned and operated by a group of individuals for their mutual benefit, often focusing on community needs and services.

for profit social enterprise

organizations that prioritize social goals alongside financial returns, aiming to benefit society while generating income.

non profit social enterprise

organizations that operate for charitable purposes and reinvest any profits back into their mission, focusing on social impact rather than profit generation.

non governmental organisations (NGOs)

entities that operate independently of government influence, often focused on humanitarian or social issues, providing services, advocacy, and support.

vision statement

a formal summary outlining an organization's long-term goals and aspirations, guiding its strategic direction.

mission statement

a brief declaration that defines an organization's purpose, core values, and primary objectives.

strategic objectives

specific, measurable goals that an organization aims to achieve within a defined timeframe to support its overall strategy.

tactical objectives

specific, shorter-term goals that an organization sets to achieve its strategic objectives, typically focusing on immediate actions and tasks.

Corporate social responsibility (CSR)

the practice of integrating ethical considerations and positive social impact into business operations, ensuring accountability to stakeholders and the community.

Stakeholders

individuals or groups that have an interest in the success and operations of a business, including employees, customers, suppliers, investors, and the community.

Conflict between stakeholders

occurs when different stakeholders have opposing interests or needs, which can lead to disputes and impact decision-making within the organization.

economies of scale

the cost advantages that businesses obtain due to scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units.

diseconomies of scale

the disadvantages or increased per unit costs that arise when a company grows beyond an optimal size, often due to factors like inefficiencies and coordination challenges.

internal growth

refers to the expansion of a company through increasing its own operations and resources, rather than through mergers or acquisitions.

external growth

growth achieved through mergers, acquisitions, or partnerships with other companies.

reasons for businesses to grow

Businesses may wish to grow to increase market share, achieve economies of scale, enhance competitive advantage, diversify risks, and drive profitability.

reasons for businesses to stay small

Businesses may choose to remain small to maintain control, reduce costs, provide personalized service, remain flexible, and avoid the complexities of larger organizations.

mergers and acquisitions

refers to the processes through which companies consolidate by either merging with or acquiring other companies. These strategies aim to enhance market position, increase operational efficiency, and drive growth.

takeovers

involve one company acquiring control over another company, usually by purchasing a majority stake. Takeovers can create synergies, increase market share, or foster rapid expansion.

joint ventures

are business arrangements where two or more parties collaborate to undertake a specific project or business activity, sharing resources, risks, and profits.

strategic alliances

are agreements between two or more companies to undertake a mutually beneficial project while remaining independent organizations. These alliances enable participants to share resources and expertise, promoting innovation and market access.

franchising

is a method of expanding a business by allowing individuals or other companies to operate under the franchisor's brand, following established guidelines and paying fees or royalties.

Multinational companies

are organizations that operate in multiple countries, managing production or delivering services on a global scale while adapting to local markets.

Impact of multinational companies on the host countries

includes economic growth, job creation, technology transfer, and potential negative effects like cultural erosion and environmental concerns.

human resource management

involves the strategic approach to the effective management of people in an organization, focusing on recruitment, development, and welfare of employees.

internal factors that influence human resource planning

include organizational culture, workforce demographics, and strategic goals.

external factors that influence human resource planning

include economic conditions, labor market trends, and legal regulations.

reasons for resistance to change in the workplace

may include fear of the unknown, perceived loss of control, and lack of trust in leadership.

flexi-time

A flexible work schedule that allows employees to choose their working hours within certain limits, promoting work-life balance and productivity.

gig economy

A labor market characterized by short-term contracts and freelance work as opposed to permanent jobs, often facilitated by digital platforms.

organisational structure

The way in which the activities of an organization are directed and coordinated to achieve its goals, including allocation of responsibilities and authority.

delegation

The process of assigning responsibility and authority to employees to carry out specific tasks, allowing managers to focus on higher-level functions.

span of control

The number of subordinates a manager can effectively supervise, impacting organizational efficiency and decision-making.

levels of the hierarchy

The various layers of management within an organization, defining the chain of command and levels of authority, typically including top-level, middle-level, and lower-level management.

chain of command

The line of authority and responsibility within an organization that dictates who reports to whom, facilitating communication and decision-making.

bureaucracy

A system of management characterized by strict hierarchical structure, clear rules and procedures, and a focus on efficiency and standardized processes.

centralisation

The concentration of decision-making authority at the top levels of management within an organization, limiting the autonomy of lower-level managers and employees.

decentralisation

The distribution of decision-making authority closer to the lower levels of management in an organization, allowing for greater autonomy and flexibility among employees and teams.

delayering

The process of reducing the number of levels in an organization's hierarchy to improve efficiency, communication, and decision-making.

matrix structure

A type of organizational structure that combines functional and project-based divisions, allowing for flexible allocation of resources and collaboration across teams.

flat organisation

A type of organizational structure with few or no levels of middle management between staff and executives, promoting more direct communication and quicker decision-making.

horizontal organisation

A type of organizational structure that emphasizes a flatter hierarchy, promoting teamwork and collaboration while reducing managerial layers.

tall organisation

A type of organizational structure characterized by many levels of hierarchy, leading to a more pronounced chain of command and often slower decision-making.

by product organisation

A type of organizational structure that groups employees based on specific products or product lines, allowing for focused management and specialized teams that cater to different market needs.

by functions organisation

A type of organizational structure that groups employees based on their specific functions or roles within the company, such as marketing, finance, and production, promoting specialization and efficiency.

by region organisation

A type of organizational structure that organizes employees based on geographic regions, facilitating better regional management and localization of products or services to meet specific market demands.

management

The process of coordinating and overseeing the activities of a business or organization to achieve defined objectives efficiently and effectively.

leadership

The ability to influence and guide individuals or teams towards achieving common goals, often involving decision-making, motivation, and effective communication.

autocratic leadership

A leadership style where one individual makes decisions unilaterally, often without input from team members, prioritizing efficiency and control.

paternalistic leadership

A leadership style that combines authority with a protective and supportive approach, where leaders prioritize the welfare of their team members while maintaining control over decision-making.

democratic leadership

A leadership style that encourages participation and input from team members in the decision-making process, fostering collaboration and a sense of ownership.

laissez-faire leadership

A leadership style characterized by a hands-off approach, where leaders provide minimal direction and allow team members to make their own decisions, promoting autonomy and creativity.

situational leadership

A flexible leadership style that adapts to the needs of the team and the demands of the situation, emphasizing different approaches based on the maturity and competence of team members.

motivation

The process that initiates, guides, and maintains goal-oriented behaviors, often driven by intrinsic and extrinsic factors.

Taylors motivation theory

A theory that suggests task efficiency and employee motivation can be improved through financial incentives and the systematic study of work processes.

Maslow’s motivation theory

A psychological theory proposing that human needs are arranged in a hierarchy, from physiological needs to self-actualization, and that individuals are motivated to fulfill these needs progressively.

Herzbergs motivation-hygiene theory

A theory that distinguishes between hygiene factors, which can cause dissatisfaction, and motivators, which can drive satisfaction and productivity in the workplace.

McClellands acquired needs theory

A motivational theory that identifies three primary needs—achievement, affiliation, and power—that influence individuals' work behavior and effectiveness.

Deci and Ryans self determination theory

A psychological theory that emphasizes the importance of intrinsic motivation and outlines three basic psychological needs: autonomy, competence, and relatedness, which are essential for fostering motivation and engagement.

Equity and expectancy theory

Equity theory focuses on the perceived fairness of work relationships, while expectancy theory proposes that motivation is influenced by the expected outcomes of one's efforts, including the belief in the likelihood of reaching desired performance and rewards.

Labour turnover

The rate at which employees leave a workforce and are replaced, often measured over a specific period. High turnover can indicate issues with job satisfaction, workplace culture, or management.

Formative appraisal

A process that evaluates employee performance over time, focusing on ongoing feedback and development rather than solely on end results.

Summative appraisal

A process that evaluates employee performance at the end of a specific period, using final outcomes to assess effectiveness and inform administrative decisions.

360 degree feedback appraisal

An evaluation method that gathers feedback from multiple sources, including supervisors, peers, subordinates, and self-assessments, to provide a comprehensive view of an employee's performance.

Self appraisal

A process where employees evaluate their own performance, reflecting on strengths and areas for improvement to foster personal development.

Methods of recruitment

Techniques used to attract, select, and hire suitable candidates for job openings in an organization.

Internal recruitment

The process of filling job vacancies by considering candidates already within the organization, often promoting existing employees to higher positions.

External recruitment

The practice of sourcing candidates from outside the organization to fill job vacancies, expanding the talent pool beyond current employees.

Salary

The monetary compensation paid to employees in exchange for their work, typically expressed as an annual amount or hourly wage.

Wages

Payment made to employees based on hours worked or quantity of output, usually calculated on an hourly, daily, or piecework basis.

commission

A form of compensation based on the sales or performance of an employee, often calculated as a percentage of the revenue generated.

performance related pay

A compensation model that ties an employee's pay to their performance and contribution to the organization's goals, encouraging productivity and achievement.

profit related pay

A compensation structure where employees receive additional pay based on the company's profitability, aligning their interests with organizational success.

employee share ownership schemes

Programs that grant employees the right to own shares in the company, fostering a sense of ownership and alignment with company performance.

fringe payments

Additional benefits or perks provided to employees beyond their regular salary, such as bonuses, health insurance, and retirement contributions.

Job enrichment

A workplace strategy that enhances an employee's role by increasing their autonomy, responsibility, and opportunities for growth, leading to greater job satisfaction and motivation.

Job rotation

A practice where employees move between different jobs or roles within an organization to gain varied experience and skills, improving flexibility and job satisfaction.

Job enlargement

A practice that increases the number of tasks an employee performs in their job, aiming to enhance job satisfaction by providing variety and reducing monotony.

Empowerment

The process of giving employees authority, responsibility, and the means to make decisions in their work, fostering a sense of ownership and motivation.

teamwork

The collaborative effort of a group of individuals working together towards a common goal, enhancing productivity and innovation through shared skills and perspectives.

Induction training

A structured onboarding process that familiarizes new employees with organizational culture, policies, and their specific roles, enhancing their integration and effectiveness within the company.

On the job training

A hands-on training approach where employees learn and develop skills while performing their actual job duties, allowing for immediate application of knowledge in the workplace.

Off the job training

A training method that occurs away from the actual work environment, focusing on skill development through workshops, seminars, or educational programs.

organisational culture

The shared values, beliefs, and practices that shape how employees within an organization interact and work together.