SL Business Management Notes

Business

Business

A system of interconnected parts that work together to produce goods and services to meet human needs.

System

A set of interconnected parts that work together to achieve a purpose, consisting of inputs, processes, outputs, and feedback.

Inputs

Resources needed to create a product, including physical, financial, and human resources.

Processes

The methods businesses use to combine inputs to produce products, influenced by various factors such as product type and employee skills.

Outputs

The final goods and/or services produced by a business.

Feedback

Information from outputs that can be used to improve processes, including negative and positive feedback loops.

Doughnut Economics Model

A framework for understanding human needs and planetary health, aiming to meet needs while respecting ecological boundaries.

Sustainability

Meeting present needs without compromising future generations, considering impacts on people, planet, and profit.

Human Resources Management

Ensures the business employs the right number of skilled employees and treats them ethically.

Finance and Accounts

Manages the funds necessary for business operations and growth.

Marketing

The process of selling the right product at the right price to the right customers.

Operations

The core activities of a business, including planning production quantities and methods.

Primary Sector

The extraction or production of raw materials from the earth, such as agriculture and mining.

Secondary Sector

Manufacturing and processing raw materials into finished products.

Tertiary Sector

Businesses that provide services rather than goods, such as retail and healthcare.

Quaternary Sector

Services focused on knowledge, including information technology and research.

SWOT Analysis

A tool for analyzing internal strengths and weaknesses, and external opportunities and threats.

STEEPLE Analysis

A framework for considering sociocultural, technological, economic, environmental, political, legal, and ethical factors affecting a business.

Private Sector

Businesses owned and controlled by private individuals or groups, focused on profit generation.

Public Sector

Government-owned entities that provide essential services to the public, funded by taxes.

Sole Trader

An individual who owns and operates a business alone, with unlimited liability.

Partnership

A business owned by two or more individuals, sharing profits and responsibilities.

Limited Liability

A legal structure where owners are not personally liable for business debts beyond their investment.

Social Enterprises

Businesses that prioritize social and environmental goals alongside profit.

Corporate Social Responsibility (CSR)

A business model that incorporates ethical practices and social responsibility into operations.

Stakeholder

Any individual or group that affects or is affected by an organization, classified as internal or external.

Multinational Companies (MNCs)

Companies that operate in multiple countries, impacting local economies and communities.

Internal Growth

Expansion carried out by a business using its own resources, such as hiring or opening new locations.

External Growth

Expansion through partnerships, mergers, or acquisitions with other organizations.

Human Resource Management (HRM)

The function of management that involves recruiting, training, compensating, and developing employees to meet organizational goals.

Workforce

The collective group of employees within a business, considered one of its most valuable assets.

Workforce Planning

The process of forecasting the number and type of employees needed now and in the future.

Recruitment

The process of seeking, finding, and hiring individuals for positions within an organization.

Retention

The efforts made by HRM to keep employees engaged and prevent turnover.

Labour Turnover

The rate at which employees leave a workforce and are replaced.

Training and Development

The process of teaching employees new skills or improving existing skills to enhance productivity.

Appraisal

The assessment of an employee's performance, often involving steps for continuous improvement.

Dismissal

The termination of an employee's contract due to misconduct or poor performance.

Redundancy

The termination of an employee's position because it is no longer required, often due to economic conditions.

Internal Factors

Elements within an organization that affect HR planning, such as structure, size, and budget.

External Factors

Influences outside the organization that impact HR planning, including sociocultural, technological, and economic changes.

Sociocultural Changes

Shifts in societal values and demographics that affect consumer behavior and workforce availability.

Technological Changes

Advances in technology that alter the types and numbers of employees needed in a business.

Economic Changes

Fluctuations in the economy, such as recession or unemployment rates, that influence workforce needs.

Labour Mobility

The ability of workers to move geographically or change careers, affecting recruitment and retention.

Centralisation

A management structure where decision-making is concentrated at the top levels of the organization.

Decentralisation

A management structure that delegates decision-making authority to lower levels within the organization.

Matrix Structure

An organizational format where employees report to multiple managers, often used in project-based environments.

Autocratic Leadership

A leadership style characterized by centralized decision-making and little input from subordinates.

Democratic Leadership

A leadership style that values employee input and encourages participation in decision-making.

Motivation

The reasons or incentives that drive individuals to perform tasks or engage in work.

Intrinsic Motivation

Motivation driven by internal rewards, such as personal satisfaction or enjoyment of the task.

Extrinsic Motivation

Motivation driven by external rewards, such as pay or recognition.

Maslow’s Hierarchy of Needs

A theory that categorizes human needs into a hierarchy, suggesting that lower-level needs must be met before higher-level needs can be addressed.

Herzberg’s Two-Factor Theory

A theory that distinguishes between hygiene factors (which prevent dissatisfaction) and motivators (which drive satisfaction).

Job Enrichment

Redesigning jobs to increase complexity and challenge, enhancing employee motivation.

On-the-Job Training

Training conducted while the employee continues to work, allowing for immediate application of skills.

Off-the-Job Training

Training that occurs away from the employee's normal work environment, often in a structured setting.

Communication

The process of exchanging information, thoughts, and ideas within an organization.

Internal Communication

The transfer of information within the organization among employees.

External Communication

The transfer of information between the organization and external stakeholders.

Formal Communication

Communication that follows defined channels and is documented, often used for official matters.

Informal Communication

Unstructured communication that flows freely among employees, often used for casual interactions.

Barriers to Communication

Factors that hinder effective communication, such as emotional, cultural, or technological barriers.

Finance

The process of acquiring and managing money for a business.

Accounting

The process of recording money flows and assets for a business.

Procurement

Purchasing goods and services for a business.

Capital Expenditure

Spending on a company’s fixed assets (long-term investment).

Revenue Expenditure

Spending on a company’s general operational costs.

Fixed Asset

An item of property owned by a business that is intended for long-term use.

Insolvency

A situation in which a business is unable to pay its debts.

Short-term Finance

Sources of finance that are repaid within 12 months.

Medium-term Finance

Sources of finance that last longer than one year but less than five years.

Long-term Finance

Financial products that will be used for longer than five years.

Internal Sources of Finance

Money raised from the business’s or owner’s existing assets.

Retained Profits

Money a company has left at the end of the trading year after paying all costs and dividends.

Business Angel

A wealthy individual who invests in new businesses and provides mentorship.

Venture Capital

Financing that pools resources from a group of investors to fund new businesses.

Debt Finance

Money borrowed from banks or other financial institutions.

Loan Capital

A medium or long-term source of finance, often used to buy fixed assets.

Overdraft

A short-term loan attached to a bank account allowing withdrawal beyond the account balance.

Microfinance

Financial services provided to individuals with limited income and assets.

Trade Credit

A business receiving goods and services from a supplier immediately but paying later.

Leasing

Renting or hiring a fixed asset over a period of time rather than buying it.

Crowdfunding

A form of finance where many people invest small amounts to fund a business or project.

Profit

Total revenue minus total costs.

Cash Flow

Refers to cash inflows and outflows in a business.

Net Cash Flow

Cash inflows minus cash outflows.

Current Ratio

Current assets divided by current liabilities.

Acid Test Ratio

(Current assets - stock) divided by current liabilities.

Payback Period

The time it takes for an investment to pay for itself.

Average Rate of Return (ARR)

The annual forecast returns expressed as a percentage of the initial capital cost.

Profitability Ratios

Ratios that show a company’s profit in relation to other financial figures.

Market

A place where buyers and sellers come together or interact, which can be physical or virtual, and also refers to the type of product or geographical location.

Marketing

All processes involved in identifying and satisfying customer needs, including planning the marketing mix for a successful strategy.

Marketing Mix (7Ps)

The combination of Product, Price, Promotion, Place, People, Processes, and Physical Evidence in a marketing strategy.

Product

The good or service offered to customers, aiming to match customer needs and expectations for satisfaction.

Price

The amount of money charged for a product, with psychological effects on customers, determined by business objectives, costs, and competition.

Promotion

Publicizing a product or organization to increase sales, targeting the right message at the right customers.

Place

How a product is distributed to consumers, involving direct sales or intermediaries to meet consumer needs.