Business

Forms of ownership

Functional areas of business
and there responsibilities

Break even analysis

sole traider

partnership

partnership agreement

limited availability

unincorporated business

incorporated businesses

shareholders

franchise

A business owned by one person only.

a form of business in which 2 or more people jointly own a business

a written and legal agreement between business partners. It is not essential to have this but is recommended

The owners of a limited company. They buy shares which represent part of the company

Companies that have separated legal status from their owners

one that does not have a separate legal identity. Sole traders and partnerships are unincorporated businesses

A business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the license to operate this business from the operator

the liability of shareholders in a company is only limited to the amount they have invested

No functional area in a business organisation can work in isolation. In a small firm, links and interactions between people responsible for different functions are usually informal and continuous. Sales people know which customers still owe money and must not be sold any more goods on credit until a bill has been paid; the manager knows which members of staff are keen and hardworking, without being told, and a customer query can quickly be solved by asking everyone in the office for advice

different functional areas of a business

Sales and Finance

R & D and Production

Sales and Production

HR and other functional areas

Sales and Marketing

Distribution and Finance

Finance and other depts

Customer Service, Sales and Marketing

HR and Finance

Distribution and Sales

Sales must know production schedules and agree delivery dates of orders with Production so customers are not promised dates which cannot be met.
Production must tell Sales about production problems which will affect customers

Finance must know about customer enquiries to check their credit rating before sales are made. Finance will be involved when discounts are agreed or when there are problems with customer payments

Finance must know when goods have been despatched so that invoices can be sent out

Sales must be able to inform customers when deliveries are due and be aware of any problems

Must liaise over sales promotions and adverts so that sales staff can expect/handle enquiries

Finance monitors departmental spending and the achievement of financial targets

Will liaise over salary increases and bonuses

Customer Service must pass on customer feedback that could affect future product developments or future sales

Liaise over new product developments and methods of production

HR handles job vacancies, promotion opportunities, training courses and CPD for all areas/staff

break even charts

graphs which show how costs and revenues of a business change with sales. They show the level of sales a business must made in order to break even

break even point

The level of sales at which total costs = total revenue

break-even level of output

The quantity that must be produced/sold for total revenue to equal total costs (also knows as break-even point)