Business studies unit 1

What is business

Its an organization that provides goods and services

What types of products do businesses provide

• Consumer goods : goods and services sold to ordinary people (consumers) rather than businesses

• Producer goods : goods and services produced by one business for another.

What are needs

basic requirements for human survivals

What are wants

people’s desires for goods and services

What are different types of businesses

Private enterprise

Social enterprise

Public enterprise

What is the the meaning of private enterprise and what are their objectives

• Meaning : Most businesses are owned privately by individuals or groups of individuals.

They are private sector of businesses.

• Objectives : Maximise profit

What is the purpose if social enterprise and what are their objective

• Meaning : Some organisation are non-profit making. eg. Charities, pressure groups,

clubs and societies exist for reasons other than profits

• Objectives : non-profit organisation

What is the purpose of public enterprises and what is their objectives

• Meaning : Some goods and services are provided by organisations owned by central or

local government. Eg. Healthcare, Education etc.

• Objectives : Better standard of living

What is a stakeholder

an individual or group with an interest in the operation of a business

What is a shareholder

People who invest and be part of business

State all stakeholders

Entrepreneur/owner

Customer

Employees

Manager

Financiers

Managers

Suppliers

The local community

The government

Owners

• Entrepreneur : person who takes risks and sets up businesses; individual who

organises the other factors of production and risks their own money in a business

venture.

• Or Shareholder : Investor who invest money in business and get a share of profit called

“dividend”

• Objective : Profits, Dividend etc.

Customers

• Consumers : person buy the goods and services that businesses sell. Consumers

could be individual or firms.

• Objective : Cheaper price , High quality products

Employees

• Employees : person who work in businesses,

• Objectives : Salary, Training , Connection, Security etc.

Manager

• Managers : person who help to run business. They are often employed to run the

different departments in businesses such as marketing, production, finance and human

resources.

• Objective : Promotion, Salary

Financiers

• Financiers : Company / individual who lend money to the business.

• Objective : Interest / firms able to repay debt

Suppliers

• Suppliers : Businesses that provide raw materials , parts, commercial services and

utilities, such as electricity and water, to other businesses are called suppliers.

• Objective : Sales revenue , Good relationship, Prompt payment and regular orders

The local community

• Most businesses are like to have an impact on the local community. There may be more

jobs, more overtime and possibly higher pay

Government

• Taxes from businesses and their employees are used to finance government spending.

What is business objective

A statement of a specific target that a business works towards

What is the importance of clear objective

- Employees need somethings to work towards. Objectives help to motivate people.

- Without objectives owners might not have the motivation needed to keep business

going.

- Objectives help to decide where to take a business and what steps are necessary to

get there.

- It is easier to assesses the performance of a business if objectives are set. If objectives

are achieved it could be argued that the business has performed well.

What are the two types of business objectives

Financial objectives

Non financial objectives

State all financial objectives

Survival

Profit

Sales

Increase market share

Financial security

Survival

: At the beginning, owners face with high competition, lack experience and may be a

shortage of resources. So its crucial for the business to survive

Profit

Most businesses aim to make a profit because their owners want a financial return.

Shareholder would like to gain large dividends.

Sales

This is because businesses with large volumes of sales may enjoy a number of benefits. The higher the sales the higher the revenue the business gets

Incredible market share

Businesses often want to build a large market share.

Advantages

- Able to dominate market ; as a result ; it is possible to charge higher price.

- Large market share also have higher profile in the market. As a result, it is easier to

launch new products

Financial security

Some business might aim to make enough profit to give them financial security. This is

sometimes called “ Profit satisficing”

What are non financial objectives

These are objectives that are not connected with money.

State all non financial objectives

Social objectives

Challenge

Independence and control

Personal satisfaction

Social objectives

In the public sector, gov owns business which concerns on social objectives.

Aims of government

- Social objectives are designed to improve human-being.

Personal satisfaction

Some owners have developed their hobby into a business.

Challenge

Some people are motivated by challenges and starting a business can be very Challenging

Independence and control

Some people want to be “ their own boss” - they want to be in control.

Why might objective change as businesses evolve ?

businesses have to

respond to events or changes in circumstances.

Market conditions

- A new entrant may appear in the market, a rival might introduce new products all the

time

- The economy may start to decline. As a result, the demand will be declined.

Technology

- As the pace of technological development increases business may have to adjust

objectives

Performance

- The performance of business is not likely to stay constant.

Legislation

New legislation might have an impact on the objectives of a business.

Many business have become more socially responsible. This might be a reaction to

new environmental, employment or consumer legislation.

Internal reasons

Sometimes a business might change its objectives for internal reasons like if the manager gets change the new manager comes up with new objectives