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Unit 1: Business Organisation & Environment - Coggle Diagram
Unit 1: Business Organisation & Environment
1.1 Introduction to business management
Business Inputs
Labour
Capital
Land
Enterprise
Business Functions
HR
identifies the workforce needs of the business
recruits, selects and trains appropriate employees
provides motivational systems to help retain workers
Finance & Accounts
monitoring the flow of finance into & out of business
keeping and analysing accounts
providing financial information to both senior departments & other departments
Marketing
responsible for market research & analysation
Operations Management
ensuring adequate resources are available for production, maintaning production and quality levels and achieving high levels of productive efficiency
Economic Sectors
Primary
Firms engaged with extraction of natural resources to be used by other firms
Farming
Fishing
Secondary
Firms that manufacture & process products from natural resources
Brewing
Baking
Clothing
Tertiary
Firms that provide services to consumers and other businesses
Retailing
Transport
Insurance
Quartenary
Focused on IT businesses and information service providers
R&D
Business Consulting
Information Gathering
Starting Business
Why?
Entrepreneur vs Intrapreneur and its functions
Entrepreneuer - Someone who takes the financial risk of starting and managing new venture
Intrapreneuer
Intrapreneuer - Someone within a large corporation who takes direct responsibility for turning an idea into a profitable finished product by using entrepreneurial talents.
Innovative
Commitment & Self-motivation
Multi-skilled
Leadership skills
Belief in oneself
Risk-taker
Impact of enterprise (and intrapreneurship) on business activity
Employment creation
Economic Growth
Firms' survival & growth
Innovation & Technological Change
Common steps in starting business and its problem
Common Steps
Sourcing capital
Determining a location
Building a customer base
Problems
Competition
Lack of record-keeping
Lack of finance & working capital
Poor management skills
Change in business environmet
Business plan
Process, flow and direction of our business
1.3 Organisational Objectives
Mission & Vision Statements
They quickly inform groups outside the business what the central aim and vision are.
They help to motivate employees
Help to guide and direct individual employee behaviour at work.
Aims, Objectives, Strategies, Tactics
Most effective business objectives meet SMART (Specific, Measurable, Achievable, Relevant, Time-Specific
Strategic Decisions (Long Term)
Tactical Decisions (Short-Medium Term)
Common corporate aims
Profit Maximisation
Profit Satisficing
Growth
Increasing market share
Survival
Maximising short-term sales revenue
Maximising shareholder value
Ethical Objectives
targets based on a moral code for the business
Adopting and keeping to a strict ethical code in decision-making can be expensive in the short term.
Corporate Social Responsibility (CSR)
When a firm fully accepts its legal and moral obligations to stakeholders other than investors
consider the interests of society
Measuring CSR – social audits
Social audits report on a firm’s ‘social’ performance and are becoming an important way for businesses to report on their corporate social responsibility record.
SWOT (Strength, Weaknesses, Opportunities, Threats) Analysis
Ansoff Matrix
a model used to show the degree of risk associated with the four growth strategies
Market penetration& development, product development and diversification
1.2 Types of organisation
Public Sectors
comprises organisations accountable to and controlled by central / local govt
Private Sectors
Own & control by individuals / group of individuals
For-profit organisations
Partnerships
own by partners
Unlimited liabilities
Shared decision-making
Greaty privacy & fewer legal formalities
Lack of continuity
Limited Companies
(Limited Liabilities)
Have continuity
Separate legal identity
Public (plc)
Often large business
Have legal right to sell shares to the general public
quoted on the national stock exchange
Private (Ltd)
Own by shareholders who are often members of the same families
cannot sell shares to the general public
Sole trader
Own by a person
Unlimited liabilities
Lack of continuity
Small capital
For-profit social enterprises
Social enterprises
The profit mostly reinvests to the society
Cooperatives
a group of people acting together to meet common needs and aspiration of its members
Making decision democratically
Microfinance institutions
Provision of very small loans by specialist finance businesses
Not traditional commercial banks
Providing small capital sums to entreprenuers
Public-Private Partnership
Govt. Funded
Govt funds all the organisation but the organisation is managed by private business
To increase the efficiency of the progres
Government-directed but with private sector finance and management
Encourage private funding & management sectors to operate public projects
Private Funded
Govt is released from financial burden
Often involves large capital
Managed by Govt after the assets has been constructed.
Also known as PFI (Private Finance Incentives)
Non-Profit Social Enterprises
aims other than making & distributing profit
usually governed by voluntary board
NGO's
No participation from govt.
has specific aim & purpose
Charities
Set up to raise money to help people in need
Usually allowed tax benefits
1.4 Stakeholders
Internal Stakeholders
employees
managers
shareholders
External Stakeholders
Customers
Suppliers
Governtment
Banks & Other Creditors
1.6 Growth and Evolution
Economies of Scales
Purchasing Economies
Technical Economies
Financial Economies
Marketing Economies
Managerial Economies
Diseconomies of scale
Communication Problems
Alienation of the workforce
Poor coordination & Slow decision-making
Small Organisations
Can be managed and controlled by the owner(s)
Often able to adapt quickly to meet changing customer
needs
Business Growth
Internal Growth
expansion of a business by means of opening new branches, shops or factories
External Growth
business expansion achieved by means of merging with
or taking over another business, from either the same or a different industry
Forms of External Growth
Backward Vertical Integration
same industry, towards supplier
Forward Vertical Integration
same industry, towards customer
Conglomerate
diversification – different industry
Horizontal Integration
same industry and same stage of production
Mergers
An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business
Takeovers
When a company buys over 50% of the shares of another company and becomes the controlling owner
Join Ventures
Two or more businesses agree to work closely together on a particular project and create a separate business division to do so
Strategic Alliances
Agreements between firms in which each agrees to commit resources to achieve an agreed set of objectives
Franchising
A business that uses the name, logo and trading systems of an existing successful business
Globalisation
The growing integration of countries through increased freedom of global movement of goods, capital and people
Multinational Business
Business organisation that has
its headquarters in one country, but with operating branches, factories and assembly plants in other countries
Large Organisations
Can afford to employ specialist professional managers
Benefit from cost reductions associated with large-scale
production
1.5 External Environment
Social - include population size and structure, lifestyle, age groups and
education levels
Economic - Factors such as the GDP growth rate, inflation rates, interest rates, exchange rates
Technological - include the state of the technological advancement and introduction of new technologies
Environmental - Includes weather and climate of the region, the flora and fauna of the region, environmental pressure group activity
Political - type of government that exists and its ideology as shown by its attitude to free markets, imposition of tariffs, business incentives offered and the stability of the government
Legal - any law influencing business activity, e.g. competition law, health and safety at work, consumer protection, employee protection
Ethics -The general code of ethics followed by most people in the country, and the tendency of people to be ethical.