BM (Unit 1: Introduction to Business Management)

Sustainability

The ability to meet the needs and wants of the current generation without compromising those for the future generations to meet their own needs.

Payment of FOPs

Salary/wages, interest, profit, rent

Entrepreneur

Take on financial risk, see opportunities, plans, organises and manage other FOPs

Primary sector

Extraction, harvesting and conversion of natural resources

Secondary sector

Manufacturing, construction of products

Tertiary sector

Provision of services

Quaternary sector

Intellectual, knowledge-based activities that generate and share information

Circular Supply Model

Use renewable and recyclable inputs to replace scarce and natural resources to minimise waste and aim for an efficient use of scarce resources

Resource Recovery Model

Reclaiming valuable materials from waste and reusing them as input for production, aiming to reduce landfill waste.

Product Life Extension Model

Prolonging a product's utility beyond its lifecycle through repair, remanufacturing, and upgrades to improve its durability.

Sharing Model

Shared access to products rather than individual ownership, thereby maximising the utilisation

Product Service System Model

Offer function of a product as a service, business renting their product out, shifting from product ownership to access

Private sector

Run by private individuals and businesses, more effective and complete with other private sectors

Public sector

Owned and controlled by the government to allow access to essential services, reduce unemployment and avoid wasteful competition

Incorporation

A legal difference between owners and business

Liability

Restriction on the amount of money that the owner can lose if bankrupt

Sole trader

Unlimited liability, unincorporated business, Individual who runs or own a personal business, use their personal savings or borrowing as start-up capital.

Partnership

Owned by 2 or more people, Unlimited liability, unincorporated business, share responsibilities and burdens, financed by the pool of owners’ personal funds

Deed of partnership

Legal contract that stated the amount of finance contributed, withdrawal of partners, conditions for new partners, how profit and losses shared

Privately held company (Ltd)

Shares can only bought by friends and families, no need to publish financial statement, incorporated and limited liability

Publicly held company (Plc)

Shares are by bought and sell by the public in the stock exchange market. Financial statement must be published, incorporated and limited liability

Memorandum of Association

Fundamental details of a company (name, purpose, registered address, amount of share capital invested)

Articles of Association

Internal regulations and procedures and administrative issues

Social enterprise

Revenue-generating businesses with social or environmental objectives. All profits or surpluses must be reinvested for that social/environmental purpose rather than being distributed to shareholders and owners.

For-profit social enterprise

Uses commercial business practices to achieve social goals. Focus on return surplus for social gain

Cooperatives

Owned and run democratically by their members. All owners have equal voting rights. Organisation will not end if a member dies or withdraws.

Non-profit social enterprises

Rely on public funding through donations. Achieve social goals

Non-governmental organisations (NGOs)

Non-profit social enterprise, typically run by volunteers, independent of the government, working to address social, environmental, or humanitarian issues. Aim to make a positive impact on communities and tackle global issues and challenges.

Vision statement

Long term aspiration, beliefs and principles that guide the company’s action. Visualisation of success, where the firm ultimately wants to be.

Mission statement

Declaration of organisation’s overall purpose and values. Distinguishes the organisation from others. Provide sense of direction and guide decision making.

Business objectives

Short-medium goals to achieve in line with the mission statement. To motivate employees and inform decision making.

Corporate Social Responsibility (CSR)

The conscientious consideration of ethical and environmental practices related to business activities. Acts morally towards all stakeholders and natural environment.

Stakeholders

Any person or organisation with a direct interest in stake and is affected by the activities and performance of a business

Internal growth

Business expands existing operations and capacity and sells to a wider market rather than growing by merging or acquiring other businesses. Use organisation’s own capabilities and resources.

External growth

Occurs through dealings outside organisation by amalgamation or inegration

Takeover

A company purchasing a controlling interest in another company. Hostile in nature as it is against the wishes of owners of target company

Franchises

An individual or business buys a license to trade using another firm’s name, logos, brands and trademark

Franchisor

Sells the rights of the business model, receives royalty, provides support

Franchisee

Pays a license free and pays royalty to franchisor, receives support, runs the business

Joint venture

Business involved agree to set up a new legal entity. Separate businesses will keep their corporate identity. Split the costs, risks, control and rewards of a business project

Strategic alliances

Two or more business cooperate in a business venture for mutual benefit. Affiliated businesses remain independent organisation. Alliance ends when goals are achieved.

Economies of scale

Occurs when average cost of production begins to fall as the firm operates on a larger scale due to an improvement in productive efficiency

Diseconomies of scale

When average cost begin to rise as a firm continue to increase in size until become outsized and inefficient

Multinational Companies (MNCs)

An organisation that operates in two or more counties to achieve economies of scale and diversify risks, avoid protectionist policies