Chapter 1- People In Business Flashcards
What’s a Stakeholder?
People who are affected by how a business is run
ex-Entrepreneur,Investor,Employer,Employee
Define Entrepreneur
- Spots an opportunity (gap/niche in the market)
- Uses initiative
- Sets up a business
- To make money (Profit)
- Take Risks (Financial and Personal)
Define Investor
- Provides Money (capital) to the entrepreneur
- Capital is used to set up and run a business
- Investor wants a ‘return’ on their investment
- They want a share of the profit (called a dividend) when they provide Equity Capital
- They want their investment back plus Interest when they provide Debt Capital
Define Employer
- Hires the workers
- Entrepreneur becomes employer when they can’t do all the work themselves
- Pay the employees
- Wages, commission, BIK (Google)
Define Employee
- Works for employer in return for a wage
- Performs essential tasks
- Employer can’t do all the tasks themselves (or can’t do them)
- Employees provide ideas for employers
Define INTRAPRENEURS
-Employees who provide ideas
Define Manager
-Run the business
-Help the business / entrepreneur achieve its objectives
-Manage and use resources efficiently (people, money, equipment)
-Be able to lead and motivate
Communicate well with all stakeholders
Producer
- Makes finished products to sell to consumers
- Take raw materials and manufacture a finished good
- Secondary Sector
- Use factors of Production
What are the factors of production
Land
Labor
Capital
Enterprise
Consumer
- Buys goods and services for their own personal use
- Provide the entrepreneur with feedback (market research)
Consumer depends on producers to make products they need/want and producers need consumers to make profits
Service Provider
- Operate in the Tertiary sector
- Expert services to help entrepreneurs
- Accountants, Solicitors, Couriers, Banks
- Allows the entrepreneur operate the business more effectively
Interest Groups
-An organization who comes together and campaign for a common goal by pressuring decision makers.
-By joining forces they have more money and talented people
-They are more likely to be listened to
EXAMPLE-Greenpeace
Types of Business Relationships
Co-Operative
Competitive
Dependent
Dynamic
Co-operative
-Same Objective
-Work together
-Help each other to achieve the same goal
-Win/Win
EXAMPLE
Employees co-operate with employers and take voluntary pay cuts
Competitive
-One party wants to be more successful
-Win/Lose
-Rivals
EXAMPLE
Ryanair V Aer Lingus
Employers V Employees. Employers want max profit and employees want max wage
Dependant
-Need each other to be successful
-Cannot achieve goals on their own
-Rely on each other
EXAMPLE-Consumers and Producers
Dynamic
-Constantly changing
-Sometimes competitive and sometimes co-operative
EXAMPLE
Restaurants in a town compete all year for business but come together to organize a town festival that will benefit both
what is a contract
-Legally binding agreement that is enforceable by law
What are the factors/essentials to completing a contract
- Offer
- Acceptance
- Consideration
- Intention to contract
- Capacity to contract
- Consent to contract
- Legality of form
- Legality of purpose
Offer
- Offer is made when one person asks another to enter into a deal
- All terms must be clearly set out
- No Conditions
- Offer must be communicated by speaking, writing or conduct
- Offer can be terminated before the other party accepts
- Price tag is not an offer its an Invitation to Treat
Acceptance
- Agree precisely to all the terms
- No Conditions
- Speaking, writing or conduct
- Once an offer is accepted the terms cannot be changed. If you accept an offer but ask to change the terms this is called a Counter Offer
Consideration
- Is the payment that one person gives
- It must be real and valuable
- Cannot be for free
- Generally it is money
Intention to contract
- Mean it to be a legally binding contract
- Fully understand that you will end up in court if you break the agreement
- Agreements between businesses are ALWAYS intended to be legally binding
- Agreements between family members are not
Capacity to contract
- Has the legal right and ability to make a legally binding contract
- The following are exceptions
- Under 18
- Mentally incapacitated
- Drunk / drugs /insane
- Diplomatic immunity
- Company Directors acting beyond their legal powers (Ultra Vires)
Consent to Contract
- Voluntary and genuine permission
- Not against their will
- No mistakes or lies
Legality of form
-Certain contracts MUST be drawn up on certain legal documents / forms
-If these forms arent correct it is not a legal document
Example- when buying a house the agreement must be in writing
Legality of purpose
-The contract can only be for legal transactions
No agreement that involves breaking the law is a contract
Termination of contract
Performance ,Frustration ,Agreement ,Breach of contract
Remedies for Breach of contract
Damages, Specific Performance, Rescind the contract
Termination of contract-Performance
Both sides carry out their side of the agreement
Termination of contract-Frustration
Some unforeseeable event occurs not under the control of either party. Makes it impossible to carry out the contract. EG Death or bankruptcy.
Termination of contract-Agreement
Both parties agree voluntarily to end the agreement, usually you can end a contract of employment with a month’s notice. Mutual agreement.
Termination of contract-,Breach of contract
Either side fails to carry out the agreement exactly as agreed. A condition is fundamental to the contract. A warranty is not. If you break a warranty this is not breach of contract
Remedies for Breach of contract-Damages
Financial compensation, Receive extra for inconvenience.
Remedies for Breach of contract-Specific Performance
Judge can order the person who broke the contract to carry it out exactly as agreed.
Remedies for Breach of contract-Rescind the contract
Judge returns both parties to same situation they were in before the contract. Maybe appropriate if contract was frustrated.
what is a counter offer
If you accept an offer but ask to change the terms this is called a Counter Offer
