BUSINESS UNIT 1 ib

What is a business

A decision-making organization established to combine human, physical, and financial resources to produce goods and/or provide services to satisfy customer needs and wants

Entrepreneur

An entrepreneur is an individual who plans, organizes, and manages resources for business activity, taking financial risks to earn profit

primary sector

Business activity involved in extracting, harvesting, or converting natural resources

Secondary sector

Business activity involved in manufacturing or constructing finished, physical products from natural resources or components

Quaternary sector

A sub-category of the tertiary sector involved in knowledge-based activities, creation, and sharing of information (e.g., R&D, ICT, data analytics, management consulting)

Functional Areas of Business

Human resources

marketing

operations management

finance

Start-up Opportunities

• earn profit

• job security

• making a social difference

start up disadvantages

finance/cash flow problems,

unestablished customer base,

poor marketing strategy,

high fixed start-up costs,

long working hours,

complex legal compliance,

and lack of industry experience

Private vs. Public Sector

the private sector consists of businesses owned and run by private individuals and commercial entities usually aiming to earn profit.

The public sector consists of organizations controlled by regional or national government bodies aimed at providing essential public service

Unincorporated vs. Incorporated

Unincorporated businesses treat the business and owner as the same legal entity.

Incorporated businesses create a separate legal identity between the owners (shareholders) and the company

sole trader

A commercial for-profit business owned and run by a single individual

sole traded advantages and disadvantages

Quick and inexpensive to set up; owner retains all profits; complete control over decisions; financial privacy (accounts not published to public)

Unlimited liability; limited sources of finance; high workload/stress; lack of continuity

partnership

A commercial business owned by two or more people (typically up to 20)

advantages and disadvantages

• More capital can be raised than sole traders; shared workload and varied skills/specialization; financial privacy.

• Unlimited liability for general partners; potential for interpersonal conflict; slower decision-making; profit must be shared; lack of continuity

Privately Held Companies and Publicly held companies

An incorporated limited liability business where shares are sold to private family and friends

An incorporated limited liability company whose shares are freely bought and sold by the general public on a stock exchange

adv

limited liability

continuity

financial economies of scale (for public)

disadv

shares not open to public

no financial privacy(public)

high set up costs

For-Profit Social Enterprises

Commercial revenue-generating businesses that pursue specific social or environmental objectives at the core of their operations, reinvesting surpluses into societal causes rather than maximizing owner dividends.

Cooperatives

Member-owned for-profit social enterprises democratically controlled by their members (consumers, workers, or producers) on a "one member, one vote" system

Non-Governmental Organizations (NGOs)

Private sector non-profit social enterprises operating independently of government control to support social, environmental, or humanitarian causes

NGOs Advantages and dis

eligibility for public/government grants; high employee motivation

reliance on voluntary donations, lower compensation levels

Vision Statement

An inspirational, long-term aspirational declaration outlining what an organization ultimately strives to become or achieve in the distant future

Mission statement

A succinct declaration outlining an organization's core purpose, identity, values, and day-to-day focus

Strategic Objectives

Broad, long-term targets set by senior leadership that affect the entire organization

Tactical objectives

The relatively short-term and specific goals of a business. These targets are used to guide the daily functioning of the organization.

Ethical Objectives

Organizational goals grounded in moral guidelines and social expectations that steer business decision making

Corporate Social Responsibility (CSR)

the overarching commitment and actions taken by a business to ensure its operations leave a positive moral footprint on stakeholders, society, and the environment

advantages of Ethical Objectives & CSR

Enhanced corporate image and brand reputation

improved customer loyalty

increased employee motivation morale, and retention

cost cutting through waste reduction

disadvantages

High compliance costs (e.g., fair trade inputs, green tech)

potential necessity to charge higher prices

losing price competitiveness

lower profit margins/dividends

potential stakeholder conflict

Stakeholder

Any individual, group, or organization with a direct interest in or who is affected by the decisions, operations, and performance of a business.

business plan

A business plan is an official document with details of an organization and the proposals for reaching its aims and objectives (goals).

SWOT analysis

Strengths

Weaknesses - INTERNAL

Opportunities

Threats- EXTERNAL

STEEPLE analysis

ALL EXTERNAL Environmental influences impacting business activity

Social, Technological, Economic, Ethical, Political, Legal, and Environmental

Force Field Analysis

driving forces and restraining forces weighed to make a decision