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The Nature of Business and Enterprise (Internal functions of a business…
The Nature of Business and Enterprise
What is Business?
Definition
Products Category
Durable
Non-Durable
Services
Examples
Comparison between the Service and manufacturing industries
Business Resources
Land/buildings
Capital
Labor
Enterprise
Types of business
Primary sector
Secondary sector
Tertiary Sector
Internal functions of a business
Finance
Marketing
Human Resources
Production
Research and development
Administration
External Business Influence
Competition
Direct
Indirect
Customers wants/needs
External business Influences
PESTLE
Main Aims/Objectives of Business
Profit
Revenue
Demand of the product
Price of the product
Competition in the market
Cost
Cost of resources to make the product
Cost of Labour
Government Taxes
Costs of Land/Building
Growth
To help people
Business Risk
Reasons for lailure
Low Revenue
Limited customer base
Unexpected high costs
Unexpected shocks
Reducing the risk
Lack of planning
A business Plan
Aim & Objectives
A description of the business
Information about the management and ownership
Marketing information
Finance and Resource needed
Reasons for a business plan
To gain finance from investors
To help management plan resource use
Business owners focus on every aspect of the business
The nature of marketing
Lesson Review
Stakeholder?
Conflict of interest
Difference
A manager
Stakeholder Model Approach
A Shareholder approach
Learning Outcome
Marketing
A concept
A philosophy
Difference
Production orientation
Market orientation
Concept
A market
Arrangements
Buyer
Seller
exchange
goods
Services
Marketing
consumers
communication
Distinguish
Advertising
Promotion
Attract
Retain
Supply
Right products
customers
price
place
time
Sales
:green_cross:
Importance
Competition
Economic growth
Fashion and lifestyle changes
Technology
Purpose of Marketing
Identify consumer requirement
Satisfy consumers
Anticipate future requirements
Compete effectively
Identify opportunities
Types of customers
The Consumer market
Emotive
Personal consumption
The industrial market
Rational
Making profit
Orientation
Market
Market research
Wide range of products
Fashion
Lots of promotion
Nature
Consult consumers
Design products
Repond to change
Realistic price
Product
Rarely does market research
One or two product lines
Not much promotion
Nature
Decisions
Product development
examples
Ford Motor
Concord
Market VS Product
Concord VS Boeing 747
Case studies
Types of business
Partnership
Meaning
More than one owner 2-20
Unlimited liability
Governed by the partnership act of 1890
Advantages
No legal instructions are needed (Unless a 'partnership agreement')
Greater sources of financial support
Greater experience and knowledge
Less work load (holidays+ less working hours)
Workload does not directly affect income
Shared liability (in debt)
Disadvantages
Still Unlimited Liability
Shared profits
Devision making can be difficult
Limited number of partners
Setting up a partnership
A partnership agreement/Deed of partnership
Each partner's investment amount
The percentage of control and profits
Agreed rules about accepting new partners
Private Limited Company
Definition
Shares are sold to the public through the 'stock market' to increase investment
Advantages
Has ability to raise lots of money from the sale of shares
Can borrow easily due to the size of company
Can outgrow the competition and dominate the market
Can research and develop new and exciting products
Disadvantages
Can be easily taken over if someone buys the majority of shares
Very expensive to set up
Accounting information can be viewed by anyone
pay Corporation Tax
Public Limited Company
Definition
Shares are privately owned and are not available to everyone
Advantages
Limited liability
No limit on number of investors
Control cannot be lost to outsiders
Survive after the death of a shareholder
Easy to deal with other companies
Disadvantages
Shared profits
Costly to set up
Cannot be traded in public with limits capital
May take a long time for a shareholder to sell shares
Financial information filed with the Registrar can be seen by others
Has to pay corporation tax
Features of Private and Public Limited Companies
Limited Liability
Business is divided into small parts
Managed by Directors (Appointed or voted)
Sole trader
Advantages
Government support
Flexible working hours and conditions
Easy and low cost to set up
Small business 0-49z
More personal to customers
The owner has complete control over the business
The owner gets all the profit if successful
Disadvantages
Unlimited liability/Debts
Income-solely dependent in the success_long working hours
Limited source of finance
Limited knowledge and experience
Too small to achieve any economies of scale
Three reasons why a business would fail?
Learning objectives
Market Research and Segmentation
Why
Market Research
An understanding of the customer
SAFER
Customer Relations
Two Way relationship
Product Positioning
Steps
Identify customers
Who
What do they buy
When
Where
Why
Identify Competitors
Who are they
Where do they operate
How much
A market gap?
Types
Primary Research
Direct
Questionnaires
Focus groups
Interviews
Experiments
Observations
Competitor Scans
Consumer Product tests
Secondary Research
planned & gathered
Journals
Newspapers
Government statistics
Internet
Commercial Research Reports
Types of Data
Quantitative
Numberical
Qualitative
Psychological
Data collection methods
Qualitative Research
People's feelings
Time consuming
Subjective opinions
Difficult to measure and compare
Advantage
Deeper
Psychology
Disadvantage
Less representative
TIme consuming
Subject
Difficult to measure
Quantitative
Recording and measured in number form
Easily compared over time periods
Easy to show graphically
Advantage
More representative
Easily compared
Easy to show
Disadvantage
Shallow
Not psychology
combined
Sampling
Random
A fair opinion
Market Segmentation
Definition
Divising
Know and understand consumers better
Target the right segment
Target Niche market
Types
Demography
Age
Gender
Social class
Income
Religion
Ethnic grouping
Geographical
Psychographic profile
Attitude
Opinions
Lifestyles
Political orientation
Personality and lifestyle