Studied by 11 people
business
an organization that produces goods or provides services to meet the needs and wants of customers, with the aim of making a profit
Business Objectives
Profit Maximization, Survival, Growth, Market Share, Customer Satisfaction, Ethical and Environmental Goals
Profit Maximization
The primary goal for most businesses, aiming to generate the highest possible profit
Survival
Especially important for new businesses or those facing economic downturns
Entrepreneurs
individuals who start and run businesses, taking on financial risks in the hope of profit.
Sole Traders, Partnerships, Private Limited Companies (Ltd), Public Limited Companies (PLC), Not-for-Profit Organizations
Types of Business Ownership
Sole Traders
A business owned and operated by one person.
Partnerships
A business owned by two or more people who share profits and responsibilities
Private Limited Companies (Ltd)
A business owned by shareholders with limited liability, but shares are not publicly traded.
Public Limited Companies (PLC)
A business owned by shareholders with limited liability, and shares can be traded publicly on the stock exchange
Not-for-Profit Organizations
Organizations that operate for social, educational, or charitable purposes rather than profit
Not-for-Profit Organizations
Example: Oxfam, local community groups
Partnerships
Example: Law firms, medical practices
Sole Traders
Example: Local hairdresser, freelance graphic designer
Private Limited Companies (Ltd)
Example: Local construction companies, family-owned businesses
Primary Sector, Secondary Sector, Tertiary Sector
Sectors of Industry
Primary Sector
Involves the extraction and harvesting of natural resources
Secondary Sector
Involves the manufacturing and processing of raw materials into finished goods
Tertiary Sector
Involves the provision of services rather than goods.
Retail, healthcare, education
Examples of Tertiary Sector
Agriculture, mining, fishing
Examples of Primary Sector
Factories, construction, food processing
Examples of Secondary Sector
Operations, Marketing, Finance, Human Resources (HR),
Business Functions
Operations
The activities involved in the production of goods and services
Marketing
The activities aimed at promoting and selling products or services
Finance
The management of money and other financial resources
Human Resources (HR)
The management of people within an organization
Production planning, quality control, inventory management
Key Activities of Operations
Market research, advertising, sales promotion
Key Activities of Marketing
Budgeting, accounting, financial planning
Key Activities of Finance
Recruitment, training, employee relations
Key Activities Human Resources
Economic Factors
Legal Factors
Social Factors
Technological Factors
Ethical Factors
External Influences on Business
Economic Growth, Interest Rates, Exchange Rates, Inflation
Economic Factors
Economic Growth
An increase in the production of goods and services in an economy over time
Interest Rates
The cost of borrowing money or the reward for saving.
Exchange Rates
The value of one currency in terms of another
Inflation
The rate at which the general level of prices for goods and services rises
Consumer Protection Laws
Employment Laws
Environmental Laws
Legal Factors
Consumer Protection Laws
Purpose: To ensure businesses provide safe and accurate products and services.
Examples: Sale of Goods Act, Consumer Rights Act.
Impact on Business: Requires compliance, potential costs for rectification
Employment Laws
Purpose: To protect the rights of employees.
Examples: Minimum wage laws, health and safety regulations.
Impact on Business: Affects hiring practices, working conditions, and compliance costs
Environmental Laws
Purpose: To minimize the environmental impact of business activities.
Examples: Pollution controls, waste management regulations.
Impact on Business: Encourages sustainable practices, potential fines for non-compliance.
Changing Demographics
Consumer Lifestyles
Cultural Trends
Social Factors
Changing Demographics
changes in the structure of the population.
Impact on Business: Affects market demand, labor supply
Consumer Lifestyles
Changes in how people live and what they value.
Impact on Business: Influences product development, marketing strategies
Cultural Trends
Changes in societal norms and values.
Impact on Business: Affects branding, product offerings.
Innovation, Automation, E-commerce
Technological Factors
Innovation
The introduction of new ideas, products, or processes.
Impact on Business: Drives growth, improves efficiency, creates new markets
Automation
The use of technology to perform tasks without human intervention.
Impact on Business: Reduces costs, increases productivity, may lead to job displacement
E-commerce
Buying and selling goods or services over the internet.
Impact on Business: Expands market reach, changes retail dynamics.
Corporate Social Responsibility (CSR)
Ethical Marketing
Ethical Factors
Corporate Social Responsibility (CSR)
Businesses taking responsibility for their impact on society and the environment.
Impact on Business: Enhances reputation, attracts customers, may increase costs
Ethical Marketing
Promoting products in a way that is honest and socially responsible.
Impact on Business: Builds trust, avoids misleading claims
Internal (Organic) Growth
External (Inorganic) Growth
Methods of Business Growth
Internal (Organic) Growth
Expansion from within the business using its own resources.
Methods: Increasing production capacity, launching new products, expanding into new markets.
Advantages: Control over growth, gradual expansion, retains company culture.
Disadvantages: Slow process, limited by internal resources.
External (Inorganic) Growth
Expansion by merging with or acquiring other businesses.
Methods: Mergers, acquisitions, strategic alliances.
Advantages: Rapid growth, access to new markets and technologies.
Disadvantages: High costs, potential for cultural clashes, regulatory challenges
Economies of Scale
Cost advantages reaped by companies when production becomes efficient
Technical, Managerial, Purchasing, Financial
Types of Economies of Scale
Diseconomies of Scale
The cost disadvantages that firms experience when production becomes inefficient
Communication Issues, Coordination Problems, Bureaucracy
Causes of Diseconomies of Scale
Note 
Flashcard (48)