business

What is a business

It is an entity or organization that uses resources to Legal and Ethical Issues in Business produce and exchange goods and services with the goal of maximizing profit.

How can you classify private sector in Business organizations

Business organizations in the private sector can be classified according to how they are financed, owned and controlled.

Business organisations in the private sector include

sole traders, partnerships, cooperatives, limited companies and franchises.

The success of the functional areas of businesses are highly dependent on the activities of

The stakeholders of these businesses.

Define a stakeholder

A stakeholder may be defined as any individual, institution, group or agency which has a vested interest in how well a business performs

What are Legal issues

Legal issues inform the way in which business operations need to be conducted and established, related to government regulations and laws.

What are Ethical issues

Ethical issues refer to the moral responsibility of the entrepreneur to ‘do the right thing’ towards internal and external stakeholders.

Instruments of exchange include

cheques, credit cards and electronic bank transfers among others.

Example of types of business organisations in the private sector

Sole Trader, Partnership, Company, Franchise and Cooperative.

Sole Trader

The sole trader or sole
proprietorship is a business owned, financed and controlled by one person, who has unlimited liability

Partnership

A partnership is an agreement between two or more people to own, finance and run a business jointly and to share any profits

Company

A company may be
defined as a separate legal entity that is owned by a group of persons, or other companies, who have purchased shares in the business (shareholders)

Franchise

A franchise is a business entity where a franchisor grants a franchisee a licence to use the established brand and reproduce the franchisor's product

Cooperative

A cooperative is an organization that is jointly owned and democratically controlled by its members

Examples of Internal Stakeholders

• Owners / Shareholders
• Board of Directors
• Managers
• Employees

Examples of External Stakeholders

• Government
• Customers
• Suppliers
• Lending Institutions
• Competitors
• The community

Examples of instruments of exchange

• Credit card
• Debit card (Linx Card)
• Bill of exchange
• Money order
• Bank draft
• Telegraphic money transfer
• M-Money / Mobile Money / Mobile Wallets
• Electronic transfers
• Internet banking
• Tele-banking
• Ecommerce
• Cheque

Management

Management involves the organisation and coordination of people and activities in order to achieve agreed aims and objectives.

Describe a good leader

A good leader will often use a mixture of leadership styles, depending on the situation and the skills and attitudes of those they report to or manage.

Organizational structure

Organizational structure refers to the way in which a business allocates roles, responsibilities and management authority within its organisation to achieve its objectives.

Conflict may be described as a clash of interests, ideas or objectives between one or more individuals within an organization.

Industrial relations

Industrial relations refers to the management of relationships between managers and workers, and the ways in which both sides express and handle these relationships.

What is motivation

Motivation is the general willingness or desire to fulfil a given task or goal.

What is communication

Communication is the process by which a message or information is passed from one person or organization to another.

Management

• Planning
• Organising
• Directing
• Controlling
• Coordinating
• Delegating
• Staffing
• Communicating
• Motivating

An organizational chart for a business can show

The auxiliary, The organizational hierarchy, chain of command and span of control.

The organizational hierarchy

The different levels of management within the organization.

The chain of command

The chain of command of each manager in terms of the other levels of management they have authority or seniority over.

The span of control

The span of control each manager has in terms of the number of employees that report directly to them.

The auxiliary

The auxiliary or support staff to managers within the firm (includes: secretaries, administrative assistants, legal advisers).

Autocratic Leadership

An autoratic leader tells employees what to do, and expects orders to be followed without question, which can help with making quick decisions, but can lead to employee dissatisfaction.

Democratic Leadership

A democratic leader consults other managers and
employees and involves them in problem solving and decision making.

Laissez-faire Leadership

A laissez-faire leader is a “hands off” manager, who
communicates aims and objectives to employees, but allows the employees to make their own decisions.

Financial strategies to motivate employees

• Overtime pay
• Bonuses
• Commission
• Piece-rate pay
• Profit-sharing
• Allowances

Non-financial strategies to motivate employees

• Opportunities for
• Promotion
• Training
• Awards or recognition
• Social activities

Strategies employees could use to resolve conflict at work

• Resolve dispute directy
• Use independent third- party, which can take the following forms: Mediation, arbitration; conciliation
• Seek trade union representation.

Strategies employers could use to resolve conflict at work

• Resolve dispute directly
• Use independent third- party, which can take the following forms: Mediation, arbitration; conciliation
• Lock-outs
• The hire of temporary labour
• Refusal to negotiate with employees or their representatives
• Scare tactics.

Different channels of Communication

Upward
Downward
Horizontal

Upward Communication

from employees to management.

Downward Communication

from management to employees.

Horizontal Communication

across the span of control of different managers, between managers or between employees who are at the same level.

Communication methods

Verbal Communications
Written communications
Visual communications

Verbal Communications

Via telephone or in face-to-face meetings.

Written communications

Include writing to a receiver using a memo, notice, letter, text messages or e-mail.

Visual communications

Include sending videos, pictures, charts and diagrams.

The Role of an Entrepreneur

An entrepreneur identifies business opportunities.

The characteristics of an Entrepreneur

They are innovative, with new ideas, and take risks to provide goods and services for prospective customers.

What is the business plan

The business plan is a document that will guide you from your business idea to reality.

Reasons for preparing a business plan include

• To research and assess the feasibility of the business
• To attract potential investors
• To raise finance
• To guide the operations of the business when making decisions
• To ensure the business complies with all necessary laws and regulations.

Factors that affect the choice of location

The cost and availability of land or premises.

What is Market pull

Market pull refers to the 'pull' or attraction of the target market. It is used in location decisions, where locations near to major consumer markets can result in a competitive advantage.

The essential steps you'd need to take before starting a business

• Conceptualisation (developing business idea and concept)

• Research / Market probe (do market research on consumer characteristics in your market, the features they want and the prices they can / are willing to pay)

• Identification of Resources (identify resources needed such as materials, machinery, equipment, premises and people)

• Creation of a Business Plan

• Acquisition of Funds (necessary for buying or hiring resources. This could be from personal funds, loans or investments)

Key functions performed by Entrepreneurs

• Conceptualising
• Planning
• Accessing finance
• Organizing
• Operating the business
• Risk bearing
• Evaluating business performance
• Making a profit and managing losses

Characteristics of Entrepreneurs

• Creative
• Innovative
• Flexible (Adaptable)
• Goal oriented
• Persistence and perseverance
• Willingness or propensity to take calculated risks

Key elements of a Business Plan

• Introduction (gives brief information, the name(s) of the owners, proposed business location, name of the business and the amount of financing needed)

• Executive Summary (summarises all other sections of the business plan: gives the reader a synopsis of the business and its layout)

• The Business Opportunity (gives an overview of how the business opportunity came about)

• Operational Plan (a detailed plan that sets out how each team, section or department will contribute to the achievement of the organisation's goals)

• Marketing Plan (will outline the ways in which your marketing will be organised -including marketing strategies and the marketing budget)

• Financial Forecast (the financial forecast should give details of how any investment will be repaid by the business whilst the daily expenses of the business are taken care of)

Factors which influence a business location

• Geographical setting
• Availability of raw materials and supplies
• Access to roads, ports and other infrastructure
• Access to power and water supplies
• Access to telecommunications
• Access to a supply of suitable labour
• Access to health facilities
• Government assistance and regulations

Each day, a business will enter into contractual relationships with other businesses and individuals. These can include suppliers, employees, customers and government authorities.

The businesses, or people involved in a contract are referred to as

The parties.

What is a contract

A contract is a voluntary but legally binding agreement between two or more parties.

Benefit of Record keeping

Record keeping helps with decision making, accountability, retrieval of important information, evaluating performance and compliance with tax and auditing regulations.

Business documents include

Invoice, pro forma invoices, purchase requisitions and purchase orders, statements of account, credit notes and debit notes.

Tell what an insurance contract or policy is

It is a written agreement between an insured party (policyholder) and the insurance provider.

What is the reason for a Insurance

It allows your risk of loss from known events to be transferred from one party to another in exchange for a payment (premium).

All contracts will display the following essential characteristics

Offer
Acceptance
Consideration
Intention to create legal relations
Competence of parties

Offer is defined as

An indication of a person's willingness to enter into a contract on the terms that he/she has put forward.

Acceptance is

When the offeree agrees to the offer, thereby committing themselves to the contract.

Consideration is defined as

The term given to what is being done given (or not being done) as a benefit/ item of exchange in the contract.

Intention to create legal relations is

When the parties are willing to accept the legal consequences of failing to fulfil their legal obligations under the contracts.

Competence of parties is when

Individuals entering into a contract must have legal capacity or competence.

Key examples of business documents

Purchase Requisition
Pro-forma Invoices
Purchase Order
Invoice
Credit Note
Statement of Account
Stock Card

What is a Purchase Requisition

A purchase requisition is an internal business document used to inform the relevant persons that a purchase is being requested.

What is a Pro-forma Invoices

Pro-forma invoice is an estimate or quotation, also known as a preliminary bill of sale.

What is a Purchase Order

A purchase order is the document issued to a supplier that stipulates what is being purchased.

What is a Invoice

An invoice is a document showing the details of goods bought or sold.

What is a Credit Note

A credit note is a document sent by the seller to the buyer indicating that the buyer's outstanding balance to the seller has been credited or reduced. &

What is a Statement of Account

What is a Stock Card

A stock card is an internal business document used for recording the movement of stock, also referred to as an inventory card.

The Principles of Insurance

Principle of Utmost Good Faith
Principle of Insurable Interest
Principle of Indemnity
Principle of Subrogation
Principle of Loss Minimization
Principle of Nearest or Proximate Cause

Principle of Utmost Good Faith

The insurer and the insured must honestly disclose all relevant facts and issues pertaining to the insurance contract.

Principle of Insurable Interest

An individual can only insure something that he has a monetary interest in.

Principle of Indemnity

To restore the insured to the same financial position as before the loss occurred.

Principle of Subrogation

If the insured party has been compensated for loss of an asset, ownership of that asset now lies with the insurer.

Principle of Loss Minimization

The insured person must take all steps necessary to minimise losses.

Principle of Nearest or Proximate Cause

The main cause of an event, where there may have been several contributing causes.

Types of Insurance

• General Liability or Public Liability Insurance
• Property Insurance
• Auto Insurance
• Worker's Compensation Insurance
• Professional Liability Insurance
• Product Liability Insurance
• Accident and Sickness Insurance
• Trade Credit Insurance
• Business Interruption Insurance
• Event Insurance
• Goods in Transit Insurance
• Marine Insurance
• Health Insurance

Expanded definition of what production is

The process of production adds value to raw materials and other inputs by turning them into useful goods and services that other consumers need and want, and are willing and able to pay for.

Four factors of production

land, labour, capital and enterprise.

What is Productivity

Productivity measures the output produced from a given amount of factor inputs (the efficiency of production).

How many persons can a small business employ

A small business employs between seven and 25 people.

A micro-enterprises employ how many person

They are generally thought to employ fewer than nine persons.

Why does most businesses remain small

Either through choice or because the size of their markets is small.

When does Internal growth occurs

When a business uses its own resources to increase its scale of production.

When does External growth occurs

It occurs when two or more businesses combine to form a larger one, and this is also known as integration.

Land

Land includes geographical areas of land, as well as all the natural resources that can be extracted or produced from the land.

Examples of Natural resources

fertile soils, sunlight, beaches, sand, water, plants, trees, animals, fish, oil, gases and minerals.

Natural resources can be classified into

'renewable' and 'non-renewable' resources.

Labour

Labour is the physical and mental efforts of people that contribute to businesses.

Different skill levels included in labour

managerial and professional, skilled, semi-skilled and unskilled.

Capital

Capital includes human-made resources "capital goods" to produce other goods and services.

Enterprise

Organizing land, labour and capital inputs to create and produce goods or services that people and other businesses want is called enterprise.

The three main industrial sectors are

Primary Industry
Secondary Industry
Tertiary Industry