business: theme 1 (copy)

non-price factors affecting demand

non-price factors affecting demand

trends\fads\fashion, price of substitutes (fly or via ferry), alternative brands, price of compliments, changes in consumer income, marketing, advertising, population\demographics, time of year, weather\climate, external shocks.

non-price factors affecting supply

cost of production, introduction of new technology (increase), indirect taxes (decrease), government subsidies (increase), external shocks

reasons businesses fail

not investing into the market, business plan problems, too little financing, bad location\internet presence and marketing, remaining rigid, expanding too fast.

entrepreneur

a person who sets up a business and takes risks in the hope of profit or reward

reasons to start a business

passion\interest, environmental consideration, charity, risk-taking, independent working\flexibility of working.

day-to day tasks of an entrepreneur

report the sales, check emails+phone calls, customer feedback (reviews), purchasing\reviewing supply\listing stock for sale, meetings, chasing payments.

ways to expand the business

open in another location, offer the B as a franchise, license the product, diversify (e.g. started with jewelry but want to go to clothes), target other markets, merge with or acquire another B

intrapreneurship, characteristics

means an employee within a larger business who thinks like an entrepreneur.

they: take risks, creative and innovative, solve problems, focus on process to improve productivity, drive innovation, understand trends, self-confident, proactive in adding value.

barriers to entrepreneurship

entrepreneurial capacity: certain skills, experience and knowledge of entrepreneurship; the ability to think like an entrepreneur (lack of this - barrier);

access to finance (lack of funding - a barrier);

lack of training\knowledge.

fear of failure

lack of confidence

risk; financial risks\lack of security

this is a possibility that the B will have a lower than expected profit or loss (e.g. unlimited liability);

financial risks: starting a B, owners may put their personal assets into B, sole trader\partnerships - unlimited liability;

lack of security: if an entrepreneur has a regular job and they decide to leave it for smth else - a risk; they may have a mortgage a car and other bills to pay, also there may be insecurity of sales of falling consumer incomes.

uncertainty

is when businesses are unable to predict external shocks of future events;

extreme weather, health scares, commodity price shocks, changes in exchange\interest rates.

entrepreneurial characteristics and motives

character.: it’s the skill, quality or trait of the person starting the business- creativity, hard-work, resilience, initiative, self-confidence, risk-taking.

motives: it’s the factor that drives a person to start a B (e.g. to be their own boss).

entrepreneurial skills

communication, team-working, problem solving, organisation, numeracy, IT.

profit maximisation and profit satisfaction

maximisation: an entrepreneur may aim to make the highest amount of profit possible - so they will seek to minimise costs and maximise revenue.

satisfaction: or they may aim to make just enough profit to keep the B moving plus another aim at the same time (e.g. reward employees, invest in environmental project, serve the community in some way).

non-financial motives for entrepreneurs

independence, flexibility, ethical reasons, social purpose, personal challenge

low morale

the tendency among employees of feeling dissatisfied with their level of responsibility, workload etc.

business objectives

a goal or an aim of the business, that they want to achieve

survival as a B objective

first-year B can have it as a main objective, while they build their customer base and establishes itself in the market;

the objective is to reach sustainable level of sales that allows the B to reach its break even point (may involve penetration pricing and not mean much profit at start).

profit maximisation (B obj)

is when a business wants to make the most profit possible of given amount of resources;

it can help a B to maintain high levels of product development and innovation.

shrinkflation

when a manufacturer keeps the price the same but makes the product smaller;

this is instead of passing on price rise to the customer which would have a negative impact on demand.

other business objectives

sales maximisation, market share, cost efficiency, employee welfare (all the benefits and services a B will offer to its employees e.g. health insurance), customer satisfaction, social objectives.

opportunity cost

the cost of foregoing the next best alternative;

(if there is another alternative and it is not chosen, then this is also a cost for the B - an opportunity cost).

trade-off

is when less of one is exchanged for more of another.

a compromise (when there are choices a compromise must be made).

leader

the action leading a group of people or an organisation, or the ability to do this.

to be in lead, in charge of, show direction and be superior to others.

delegation, benefits

means giving authority to others to carry out tasks;

you are less overwhelmed and can focus on main tasks, increases productivity, builds skills in a team, helps to maintain work-life balance

difficulties in moving from entrepreneur to leader

the need to delegate, trust and verify, learning to listen, having an open mind, being less reactive, developing emotional intelligence (low-lacks empathy, passive and aggressive; high-empathetic, communicate assertively).

staff and staffing

the employees of the business;

the process of hiring, training and supervising employees in a business.

staff as an asset

treating staff as an asset means that they are developed with training and seen as a benefit to the B.

pros; staff are allowed to participate more in decision making, the B is more able to respond quickly to market changes, staff have more autonomy in their work, this will increase retention (retain - keep staff).

staff as a cost

they aren't free and the more you have the more costs you have;

costs of: recruitment, training, paying minimum wages, paying staff salaries and wages, staff welfare, redundancy.

multi-skilling (approaches to staffing)

pros: less staff are needed, those that are employed are used to capacity not standing around; more interesting jobs for the workers as there a variety of tasks; can increase efficiency, quality and productivity while reducing costs.

cons: works become “Jack of all trades master of none“; B lose the benefits of having the specialist staff.

full time pros and cons

pros: stable income, security ab job, more efficient (only job), maternity cover etc, loyalty to the B, access to holidays.

cons: long hour —> overwork, lose max efficiency of work, pay when employee leave, employees standing idle if there is a B downturn.

part-time pros and cons

pros: flexibility, more profit cost decrease, several jobs, flexibility to respond to seasonal changes in demand, employees have the same employment rights as full-time ones;

cons: have to do work in fewer hours, not as skilled as a full time worker, employees might not be fully committed, no loyalty;

temporary work pros and cons

pros: extra income and workforce, no extra costs for training, seasonal demand, agencies may complete all the paperwork, useful to meet employee shortage.

cons: no guarantees for employee = insecure work, agencies staff may be expensive, higher injury rates .

permanent work pros and cons

(permanent contract- there is no end for for the job)

pros: secure job and salary, stable cost and income, set team that is trained+ secure, higher staff morale ,employee’s loyalty and focus on the business (they will look to the long term to build up professional profile).

cons: limited earning, risk of redundancy, may suddenly leave, permanent staff can develop negative attitudes to work.

flexible hours pros and cons

pros: workers are more motivated, B can accommodate the work-life balance needs of employees, can keep staff from leaving and cover busy periods;

cons: productivity may decrease if workers are not time-managing well, might be no certainty of hours provided by the workers, zero hours contracts (means are ‘on call‘ to work when you need them, there are no fixed hours of work).

home working pros and cons

pros: less expenses, more independence, flexibility, less impacted by external shocks, no commute - reduction in cost of travelling, less tension with colleagues.

cons: isolation —> demotivation, dependence on technology, more distractive, may overwork and do not realise it.

outsourcing, examples

the practice of passing individual tasks, subareas, or business processes over to a third-party and thereby receiving the results from outside of your own company.

e.g. production, payroll (the system that businesses use to calculate employees' salaries in accordance with a country's legislation and local tax requirements), purchasing and maintaining information systems (IT staff), delivery.

dismissal

being fired;

reasons: absenteeism, gross misconduct, theft of company’s money or property;

workers i not entitled to a pay-out from the B if dismissed.

redundancy

when a job no longer exists;

voluntary - where some staff close to retirement choose to leave to gain a pay-out;

compulsory: when a staff must leave a job - still can include a pay-out.

trade unions

a trade union is an organisation with members (employees\workers) and looks after their interests at work by:

negotiating agreement with employers on pay and conditions; discussing big changes like large scale redundancy; discussing members’ concerns with employers etc.

floatation

once a private limited company and wants to become a PLC;

they intend to float their shares on the stock market - so they can be bought by anyone.

recruitment and selection process

1) identify the vacancy; 2) write a job description; 3) write a person specification; 4) advertise the vacancy; 5) candidates apply; 6) candidates are shortlisted; 7) interviews; 8) psychometric testing, assessment centres -recruitment activities; 9) job offer.

internal recruitment pros and cons

pros: the B already knows the candidate and is aware of their capabilities and strengths; cost-effective as there no advertising; increases morale if other staff see there are promotion prospects in job; less time consuming (- red tape);

cons: smaller pond of candidates; those who are not hired might be demotivated; lack of new ideas in B; causes internal rivalry - low morale.

external recruitment pros and cons

pros: attract a wider pool of candidates; can attract a candidate with specific skill set; recruitment agencies are very experienced at finding the right people; fresh ideas.

cons: candidates will require training and time to get used to the new work place; demotivating for staff - no promotion; recruitment agencies are very expensive; more time-consuming.

recruitment costs

advertising, agency fees, induction training.