Int 2 Business in a Contemporary Society

The Objectives of business

2006-12-18T04:39:00.000-08:00

All business organisations have there own aims. These are referred to as objectives. A businesses objectives depend on a number of many different things including:

Type of organisation
Size of the organisation
Type of goods or services which the organisation produces.
Competitive environment which it faces.
The organisations history.

The different business objectives are:

Profit maximisation
Growth
Survival
Social responsibility
Provision of a service

Sole traders and Partnerships

2006-12-18T04:07:00.000-08:00

A sole trader is a type of business owned by and managed by one individual.
The advantages of this are that it is easy to set up, the owner makes all the decisions so it is fast, and the owner receives all the profits.

The disadvantages of being a sole trader is that it is difficult to raise capital to start up the business, the owner has unlimited liability and the owner may have to work long hours to get the business up and running.

A partnership is a business owned by between two and twenty people who all have a share of the business.

The partnership is made by the people all signing the deed of partnership and has to be renewed if one partner dies or leaves the firm or a new partner is introduced into the firm.

The advantages of a partnership are that the workload can be shared, partners can specialise in certain aspects of the lob more money can be put into the business as capital.

The disadvantages of a partnership are there is still unlimited liability, it costs a lot to make a deed of partnership and partners am argue which can divide the business.

By Lenzie Academy Int 2 BM

PESTEC

2006-12-11T04:38:00.000-08:00

External Factors - PESTEC

Political factors – may include Laws, Regulations and Rules
Examples include smoking ban effecting business in bars and pubs

Economic – Inflation and Interest Rates
Examples include increasing prices for airline tickets i.e. BA Aeroplane tickets

Social – may include Grey Pound (the aging population)
Examples may include products made for older people

Technological – may include Automation or e-Commerce
Examples may include online buying or production of cars

Environmental - may include Green Issues
Examples may include the problem with old refrigerators having CFC gases in them

Competitive – Price Wars and Imitations
Examples include Asda decreasing their prices and then the other big supermarkets will have to decrease them too

By Lenzie Academy Int 2 BM Pupils

Multinational Companies

2006-12-11T04:24:00.000-08:00

Multi-National companies (MNC) operate in two or more countries throughout the world and they have their headquarters in one country.

Advantages of MNC are:

Increase market share.
Take advantage of cheaper workers and premises or local skills.
Take advantage of government grants

Disadvantages of MNC are:

Language barriers.
Relationships with host countries.
Selling and marketing for example cultural differences.

On one hand the county benefits as they get more employment, they may receive a technology upgrade and also they may become a richer country.

On the other hand the MNC has power and control over the host country, also local companies may be driven out of business and finally the environment may be damaged by the MNC as natural resources may be used up.

In conclusion MNC will always be a controversial issue but in my opinion there seems more advantages for MNCs so overall I think they should stay as they benefit the majority of people.

By Int 2 Lenzie Academy Pupils

Stakeholders

2006-11-15T14:26:00.000-08:00

Stakeholders are people with a key interest in a business

Stakeholders effect businesses by exerting influence over decisions

Their influence depends on the degree of their involvement or relative interest in company

Identifying Stakeholders

INTERNAL

Owners/Shareholders
Employees
Management

EXTERNAL

Customers
Banks
Investors
Local government
Suppliers
Donors (for Charities)
Taxpayers
Community

Stakeholder Aims/Objectives

Owners = profits, dividends

Managers = promotion, job security

Employees = wages, working conditions, job security

Suppliers = regular orders, payment

Customers = low prices, high quality

Banks = loans repaid on time

Organisational Functions

2006-11-15T14:21:00.000-08:00

This is an introduction to the areas you will study in depth in Business Decision Areas I & II.

For now here are two presentations to introduce some key ideas about the functional areas:

Organisational Functions 1

and

Organisational Functions 2

Business Sectors and Business Ownership

2006-11-15T14:16:00.000-08:00

For these two crucial elements of Business theory, check out the excellent resources at Bized:

Business Sectors

Business Sectors

Business Ownership

Business Ownership

More information will follow on Business Ownership in a later post.

Sectors of Industrial Activity

2006-11-15T14:15:00.001-08:00

Sectors of Industrial Activity

Primary Sector – businesses involved in exploiting or extracting natural resources (mining, fishing, farming)

Secondary Sector – businesses involved in manufacturing and construction. Includes utilities.

Tertiary Sector – Businesses involved in providing services such as banking, tourism, security

Goods and Services

2006-11-15T14:12:00.000-08:00

Goods and Services

Goods are tangible, things we can see and touch like clothes, DVDs, cars etc…
Goods can be durable or non-durable.

Durable means they will last a long time (such as a TV set or a CD player), non-durable is a product that will be consumed or discarded (such as a newspaper or food - do you know what perishable means?)

Services are things that are done for us. They are intangible.

Q. For the terms that are in italics, write definitions of the words.

Factors of Production

2006-11-15T14:11:00.000-08:00

Factors of Production

In order to produce goods and services, businesses need to use resources

LAND
LABOUR
CAPITAL
ENTERPRISE

Factors of Production

Land – natural resources extracted from Earth. Can be renewable or non-renewable

Labour – physical and mental effort of people in organisations

Capital – man-made resources, such as buildings, machines, tools

Enterprise – bringing together the other three factors of production

Business Activity, Needs and Wants, and Wealth Creation

2006-11-15T14:09:00.000-08:00

Business activity is any activity which provides us with goods and services that satisfies human needs and wants.

Needs – a need is something essential to our lives: food, water, shelter, clothing

Wants – a want is an additional luxury that makes life pleasurable

WEALTH CREATION
A country’s wealth is measured by how many goods and services the country can produce.

GDP (Gross Domestic Product) = number of Goods & Services produced in a territory over a specific period (usually annually)

The more goods/services sold, the more likelihood of more jobs for the population, and therefore more tax to be raised for the Government.

This in turn is hopefully invested in services for the nation.