Understanding Business Structures and Functions

Business

An organization producing goods or services for consumers.

Inputs

Resources used to create goods or services.

Outputs

Goods and services produced for consumers.

Transformation Process

Utilizing resources to create products or services.

Human Resources

Labor from employees in a business context.

Physical Resources

Machines and raw materials for production.

Financial Resources

Capital used for funding business operations.

Entrepreneurship

Skills driving innovation and risk-taking in business.

Goods

Tangible products like furniture or electronics.

Services

Intangible offerings like consulting or classes.

Operations

Production and delivery of goods and services.

Marketing

Promotion and selling of products or services.

Finance

Management of company finances and investments.

Human Resources Function

Recruitment and development of workforce.

Primary Sector

Focuses on extraction of raw materials.

Secondary Sector

Uses raw materials to produce finished goods.

Tertiary Sector

Provides services rather than goods.

Quaternary Sector

Knowledge-based activities like research and IT.

Sectoral Change

Shifting resources between sectors as economies evolve.

Private Sector

Businesses owned by individuals or groups for profit.

Public Sector

Government-operated businesses providing essential services.

Privatization

Transferring business ownership from public to private.

Sole Trader

A business run by one individual.

Partnership

A business owned by two or more individuals.

Deed of Partnership

Formal agreement outlining partner responsibilities.

Corporation

A legal entity providing limited liability to owners.

Publicly Held Company

Corporation selling shares to the public.

Privately Held Companies

Companies limiting share sales to family and friends.

For-Profit Social Enterprises

Businesses aiming for profit while aiding social causes.

Cooperatives

Member-owned businesses sharing profits and responsibilities.

Non-Governmental Organizations (NGOs)

Private entities focused on societal benefits, not profit.

Vision Statement

Long-term aspirations outlining an ideal future situation.

Mission Statement

Defines business purpose and core values.

Aims

Broad, long-term, unquantifiable goals set by management.

Objectives

Specific, measurable, time-bound goals set by managers.

SMART Objectives

Goals that are Specific, Measurable, Achievable, Relevant, Timely.

Strategic Objectives

Long-term goals guiding overall business strategy.

Tactical Objectives

Short-term, department-specific goals for immediate focus.

SWOT Analysis

Tool assessing Strengths, Weaknesses, Opportunities, Threats.

Strengths

Positive attributes of a business, like strong branding.

Weaknesses

Areas where a business struggles, like poor service.

Opportunities

External factors a business can exploit for growth.

Threats

External challenges that may hinder business success.

Advantages of SWOT

Encourages proactive thinking and aids decision-making.

Disadvantages of SWOT

Needs regular updates; may lack detail.

The Ansoff Matrix

Framework for determining growth strategies in business.

Market Penetration

Increasing market share with existing products.

Market Development

Entering new markets with existing products.

Product Development

Creating new products for existing markets.

Diversification

Launching new products in new markets, riskiest strategy.

Corporate Social Responsibility (CSR)

Businesses contributing to societal goals beyond profit.

Philanthropy

Charitable donations made by businesses.

Environmental Commitments

Efforts to reduce a company's carbon footprint.

Social Justice

Ensuring fair treatment of employees and communities.

Types of CSR

Self-Interest, Altruistic, Strategic approaches to CSR.

Internal Stakeholders

Individuals within the organization influencing operations.

Employees

Concerned with pay, conditions, and job security.

Managers/Directors

Focus on performance and profit maximization.

Shareholders

Seek maximized dividends and capital gains.

External Stakeholders

Entities outside the organization affecting its operations.

Customers

Desire quality products at competitive prices.

Suppliers

Aim for timely payments and good relationships.

Pressure Groups

Advocate for ethical business practices.

Competitors

Observe market actions of other businesses.

Government

Regulates legal and ethical business operations.

Globalization

Integration of national economies creating opportunities and threats.

Multinational Corporations (MNCs)

Businesses operating in multiple countries for global benefits.

Host Country

Nation allowing MNC operations within its borders.

Positive Effects of MNCs

Create jobs, boost GDP, and introduce new technologies.

Negative Effects of MNCs

Can harm local businesses and repatriate profits.

Scale

Size of a business affecting its management.

Economies of Scale

Cost advantages gained as production increases.

Diseconomies of Scale

Increased costs due to inefficiencies at larger sizes.

STEEPLE Analysis

Framework analyzing Social, Technological, Economic factors.

Decision Tree

Diagram showing decisions, outcomes, and probabilities.

Internal Growth

Expansion through new branches or facilities.

External Growth

Growth via mergers, acquisitions, or joint ventures.

Merger

Combination of two firms under unified leadership.

Takeover

Acquisition of one firm by another.

Horizontal Integration

Merging of firms within the same industry.

Vertical Integration

Merging with suppliers (backward) or customers (forward).

Conglomerate Integration

Merging with firms in unrelated industries.

Joint Venture

Collaboration of two firms on a specific project.

Strategic Alliance

Independent firms working together for mutual goals.

Franchise

Using a franchiser's brand and training methods.

Human Resource Management (HRM)

Strategy for managing workers to meet objectives.

Labor Turnover

Percentage of workers leaving in a specific period.

Factors Affecting HR Planning

Demographics, mobility, technology, and economy influence HR.

Recruitment Process

Includes job descriptions, advertising, shortlisting, interviews.

On-the-Job Training

New employees paired with experienced workers.

Off-the-Job Training

External training through courses and seminars.

Cognitive Training

Enhancing mental skills like memory and attention.

Behavioral Training

Modifying behavior through team building and leadership.

Formative Appraisal

Continuous feedback aimed at improving performance.

Summative Appraisal

Formal yearly assessment of employee performance.

360-Degree Feedback

Performance data collected from various sources.

Self-Appraisal

Employees evaluate their own performance.

Dismissal

Termination due to incompetence or contract breach.

Redundancy

Termination when a worker is no longer needed.

Voluntary Redundancies

Severance packages offered for voluntary departure.