Business and PeopleBy Samiya

The need for business activity The aim of a business is to provide a good or a service. Business exist to provide a product or a service to their target

market with the further intention of making money. Business will target segments of a market.

Segments may include: age; geography; gender; hobbies; interests. A market is somewhere that buyers and sellers come together to agree on a price. It isn't always a physical place.

Businesses must always know what people want. Need: Basic products which people need in order to survive. Want: The desire to consume goods or services. These are

unlimited. If a business succeeds it will attract more competition. Therefore

the market is constantly changing so businesses must be able to adapt to this in order to survive.

Business need to find a 'gap in the market' and address this. This is where a demand exists but is not yet being met.

The Influence of StakeholdersStakeholders are individuals or groups of people with a direct interest in abusiness.MANAGERS: Responsible for making a profit, need to be paid, must organise abusiness.CUSTOMERS: Price and quality of products is important, customer service,impacts on the competition.OWNERS: Want to make money and create a successful business.SUPPLIERS: How successful is the business? How reliable is the business? Is itreceiving more orders?COMMUNITY: Want jobs for the people. What effect is the business having onthe local environment? What is the business putting back into the community?COMPETITORS: How successful is the business? Who are their customers? Whatproducts/services do they offer?EMPLOYEES: Want to be paid, want job security and are interested in the socialaspects of work (meeting new people, etc.).GOVERNMENT: Can the business pay it's taxes? Is it working within the law? Howdoes it employ/ train people? Is it fair to the community and people who workfor it?The interests of different groups may conflict. For instance the owner wants abusiness to make money, but it's competitor doesn't.

All stakeholders have an interest in a businesses success or failure.

Business Aims and ObjectivesStakeholders may have different aims for a business depending on what theywant. An aim is a long term goal or vision. An objective is a task or activity which will help you to reach your aim. Why do business have aims and objectives?• To aid decision making• To motivate employees• To make sure that everyone is working towards the same goal.

Objectives should be SMART.• Specific• Measurable• Achievable• Realistic• Time Related

Business Aims and ObjectivesThree common business are:• Profit - Businesses want to make as much money as possible. If they make justenough money to allow future plans to occur, this is called satisfying. Onlycharities have this aim.• Survival - This is especially important for new businesses. It is a temporaryaim. It may be used if there are failing sales or a reduced market share.• Growth - Comes in three forms: sales; increased market share; eliminatingcompetition.Other aims within a business, but most likely more personal to the owner are:• Having a good reputation.• Having good customer service.• Enjoying your job (job satisfaction).• Providing a service.• Raising money for a cause.

Social Enterprises1. Businesses with objectives which don't result in profit but benefit a particularstakeholder group are known as social enterprises.2. These enterprises often have ethical and moral reasons for existence, wanting tobe fair and not exploit people.3. Cooperatives• Want to make sure that their members get a fair deal.• Each member invests the same capital for the same control over the business.• In larger cooperatives, management is elected.• The main types of cooperatives are: worker cooperatives - where workers poollabour to produce a good or a service; producer cooperatives - producersshare costs and help to see what is produced; consumer cooperatives - retailorganisations which help to fairly price goods; mutual societies - givemembers financial aid (building society, insurance, etc.)4. Charities• Want to raise as much money as they can for a particular cause.5. Voluntary Groups• Provide a service to the community.• May be supported by charitable donations.

Primary Sector1. The primary sector works with raw materials.2. It includes any business which turns a natural material into a resource.3. It is the first stage of production.4. The primary sector could include:• Fishing• Farming• Mining• Forestry• Quarrying• Drilling

Secondary and Tertiary sector The secondary sector works with raw materials and turns them into a finished product. 6. It involves procedures such as: • Refining • Processing •Manufacturing 7. The tertiary sector provides a service. 8. The tertiary sector is used throughout the chain of production to support the primary and secondary sectors. 9. This is the final stage of production. 10. The tertiary sector includes services such as: • Transport • Retail • Banks • Insurance

Legal Structures for Small Businesses

Sole Trader.• Owned and run by one person.• This business structure has unlimited liability.• Must raise funds alone.• Must make all of their own money/capital.• The owner must make decisions alone.• The one owner can take 100% of the profits.• This type of business is easy and cheap to set up.

PartnershipOwned and run by two or more people.This business structure has unlimited liability.This means that decisions can be shared and ideas

discussed among theowners. This however could also be seen as a

disadvantage as not every ownerwill agree most of the time. This also means that you can

use the strong pointof each owner to hopefully create a stronger business.Finance has to be raised by the owners.The profit has to be shared. This can cause problems

about who it is split. Who had put more time in? Who has invested the most?

This business model is cheap and easy to set up.

Private Limited Company - LTDs

This form of business has limited liability.It is slightly more difficult to set up as it has to be

registered at CompaniesHouse.This type of set-up is good for the customer as

because the legal identity ofthe business is separate from the owner, continuity

can be kept.However, certain accounts must be made public.Shares can be sold to friends and family in order to

gain capital for thebusiness.

Public Limited Companies - PLCsPublic limited companies usually begin as private limited companies, so alreadyhave limited liability.The main advantage of becoming a public limited company is that you can sellyour shares to the public on the stock exchange.

However, anyone can buy these shares, therefore•Other business can buy your shares, resulting in taking over your business.This can have a major effect on how the business is controlled and organised.•Other people who buy shares are only interested in the short term aim ofmaking money. This means that there interest is not in the health of thebusiness, but how much they can make from it.4. Like private limited companies, public limited companies must publish theiraccounts to the public. This means that everyone, including your competition, cansee the strengths and weaknesses of your business.

It is relatively easy to set up a PLC, and the government iOS currently working with one of the processes to make it even easier for small businesses. The process goes like this:

• Decision to set up a company.•Memorandum.• Articles.• Shares are then issued.• Details of the business are sent to Companies House.• The business is then issued a 'Certificate of

Incorporation'• The business is given a registration number.• The business can then begin trading.

Public Limited Companies - PLCs

Integration and GrowthThere is more than one type of growth.• Horizontal Integration; joining with a business at the same stage ofproduction.• Backwards Vertical Integration; joining with a business at the previous stage ofproduction.• Forward Vertical Integration; joining with a business at a later stage ofproduction.• Lateral Integration; joining with a business in a similar but not directly relatedmarket.• Conglomerate Integration; joking with a business which is from an unrelatedare to your own.• Franchising; selling the right to use a successful business model or product.This results in quick growth.

There are many advantages to growth. Some of these may include:• Having a larger market share.• Enabling economies of scale.• Become on better terms with you suppliers.• Sharing technology.

Although growth has many advantages for the business, for the consumer thismay pose a problem. Growth removes competitors which means that prices canincrease. This means that customers may as a result have to pay more than theycurrently do for the same products as they are unable to shop around.

Multinationals1. A multinational is a business which has operations in many countries around theworld.2. Most of these businesses are holing companies, this means that's they holdshares in many much smaller operating countries. These can also be known astheir subsidiaries.3. These types of business are often the result of conglomerate growth ordiversification.4. Some business are in their nature multinationals. For instance the productionand sale of oil is necessary around the world.

Multinationals There are many advantages of being a multinational, these may include: • They can buy in bulk; keeping costs low. • They can chose the location of their headquarters and production; they can chose the location with the lowest wages and tax, thus keeping costs low. • Production can occur globally, so yet again costs can be kept low as the product is made near the consumer. • The business can produce goods where there are less strict labour laws. • Their global image means that they are known and recognised around the globe. This makes it easier to compete against smaller, local businesses.

However one disadvantage may be that this type of business often comes into conflict with human rights groups. They are often seen to exploit the less well

off in the world, searching for countries with the lowest working costs and those

with less tight labour laws. This can put them in a bad light in the eyes of the consumer.

Location

When choosing a location a business must consider many factors, these mayinclude:• Closeness to the infrastructure; power, transport links, etc.•Quality and the size of the land.• How much will it cost to operate there?• The accessibility of the site.• How much competition is present there?• What type of production/business are you? If you are in the bulk decreasingindustry, you need to be close to the raw material. However, if you are part ofthe bulk increase industry, then you must be close to the consumer.

External bodies may also have an input into where a business chooses to locateitself. For instance lower taxation laws may be put into place, grants may be offeredto business which choose to locate themselves in certain places, etc.

Public Corporations1. Public corporations are owned by the local or national government on behalf ofthe public.2. They are run by independent boards. However some people who sit on theseboards have been appointed by the government.3. Some examples of public corporations could be: the national health service;national security, army, police; libraries; parks; museums; schools (to a certainextent).4. Usually public corporations are put into place because it is difficult to makeeconomic charges for a service. The service is thus provided by the authoritiesand is paid for through taxes.5. Public goods: those which it is not possible to make an economic charge for, forexample street lighting, roads, etc.6. Merit goods: these are the goods which the government feel should be providedfor social reasons and otherwise would be underused. These can include healthcare and education.7. Some of the public corporations were originally set up by the government. Oneexample is the BBC.8. Most of the public corporations were formed through the process ofnationalisation.

Recruitment and Selection1. Recruitment is the process by which a business finds new employees.Recruitment needs to take place when a need for new staff is identified by thebusiness.2. This process can be carried out by the human resource department, orbit maybe he role of the owner or manager.3. There are three main reasons why a business may need new staff:• The business could be getting bigger.• Staff could have left.• The business may need new skills.4. The process can either be:• Formal; with the process going through from a job advertisement to aninterview,• Or informal; this could take the form of a recommendation.5. A business must then decide whether to train its staff internally or recruitexternally.6. If a business decides to recruit, the process is as follows:• A job description is written; this shows what tasks, skills and qualifications areneeded.