Topic 1 – Business Organisation and Environment
* What is business activity?
Inputs – Land, Labour, Capital & Enterprise
Outputs – Goods or Service & Waste.
Processes – Research and development, Production, Marketing, Finance, Administration, Human Resources.
* Production – the changing of natural resources into a product or service. * Marketing – IT is to do with identifying consumer needs and pleasing them. Eg: Pricing, advertising, promotion, packaging, etc. * Finance – they are in control of the money in a business. They must record transactions, produce documents to show the success/failure of the business (performance) and to control the flow of money in and out of the business. * Administration – deal with enquiries and communicating messages for the workers. * Human Resources – they are there to look after the workers and ensure that they hire qualified people, they train the new employees, ensure the workers are in good health and their workplace is safe, equal opportunities between the workers, payment systems, etc. * Research and development – are expensive so not that many businesses have them. They find out research to do with the new product/service. Those businesses that don’t have this department trust their competitors and adapt their products according to the trend.
* Primary – this is the extraction or growing of natural resources from the earth i.e. Fishing, farming, mining, forestry, etc. * Secondary – this is the manufacturing of products from natural resources i.e. Baking, car production, construction, etc. * Tertiary – this is the sector of services i.e. Hairdresser, dentist, doctor, travel agent, etc. * Public – mad from organisations that are either owned or controlled by the government. * Private – this is a business started by an individual or a group of individuals
* Starting a business –
* Reasons for setting up a business –
* If you are an entrepreneur, then you are your own boss and you decide how much you earn. * You have independence and you can decide your working hours. * You get satisfaction of having created a business and this allows you to aim for higher goals in life. * You can sell whatever you are extremely passionate about. * Identifying a marketing opportunity –
* How big is the market and how can it be reached?
* Is there something special about the idea? Or is it similar to a product that’s already on the market? * How will the business be funded?
* What will be the main competitors in the market?
* Franchise – an agreement between the franchiser and the franchisees, allowing them to sell their product or use their company name. * Problems you may face –
* Revenues could end up being lower than expected
* Start-up rate costs could be higher than expected * Operating costs could be higher than expected
* Unexpected shocks (economic booms or crashes)
* Relying on a few large customers
* Operational problems
* Cash flow problems
* Lack of profitability (loss makers)
* Types of business
* Sole trader – This is a part of the private sector. This is a business that is run by one person. * Public limited – Larger businesses and their company name ends in plc. The shares of these companies can be bought and sold by the public on the stock exchange. * Private limited – Relatively smaller types of businesses. Their business name ends in Ltd. Shares can only be transferred privately and all shareholders must agree on the transfer. * NGO – Non-profit/non-governmental organization. These are businesses that do not aim to make a profit. * Charity – They raise money for good causes and draw attention to the needs of a group of people...