Creating A Business - Part 2 Flashcards
What are social enterprises?
Businesses that trade to address social problems and improve communities or the environment. They make their money selling goods and services, but they reinvest their profits back into the business or local community.
3 aims of social enterprises?
Economic , social and environmental
Explain economic aims of social enterprises
Creates employment, for those who committed crime, minority groups
Gets people off benefits
Gives people a decent wage , improves living standards
Explain social enterprise - social aim?
Ploughs profits back into community
Employs local people
Tries to ensure local Main Street benefits - sets up in a local area
Explain social enterprise environmental aim?
Try’s to promote sourcing sustainable ingredients and raw resources
Encourage reducing waste - food/plastic
Run day-to-day business in an efficient manner - lighting/heating etc
Factors that effect business location (MAIN 3)
Proximity/closeness to the market
Like to locate near primary market, large footfall, customers have easy access , reduce transport costs, product moved easily and seen by other people as they shop
Availability and price of land
Higher prices at central sites and vice versa. Competition can increase prices or even availability as well. Varies from area to area e.g newry,Dublin,London. Central sites may also not have any availability e.g Main Street full of shops
Parking
Customers/ employees require places to park their cars. City centre cars are small and expensive and vice versa
Why do businesses have aims and objectives?
Businesses are set up and exist for a purpose. A major aim of each business is to make a profit. They will set objectives and summarise their mission statement. Differ depending on size and type.
Common business aims.?
Survival
Profit maximisation
Growth
Corporate image
Concern for environment
Social responsibility
Explain business aim - survival
All business want to survive. More prevalent when just starting up and at times of recession/economic crisis.
Explain business aim - profit maximisation ensures
When turnover is greater than the cost of running the business. Profit ensures:
- owners and shareholders get a return on their investment
- staff have job security
- customers have a better standard of service
Explain business aim - growth
Increase profits, eliminate competition, selling now products , entering new markets and opening new markets: Growth ensures
- larger share of the market
- increased sales - profit
- greater job security
Explain business aim - corporate image
How a business is perceived by its stakeholders. Achieved by:
- high quality products
- contribute to local community
- treating staff/customers with respect
Explain business aim - concern for environment
To reduce CO2 emissions and pollution, businesses can adapt strategies such as:
-reducing waste
-using biodegradable materials
-reuse/recycle materials
Explain business aim - social responsibility
Many businesses aim to be socially responsible and include the communities of which they are apart of.
- employ local people
- taking part in local events
- sponsor activities
- allow charités to organise events on premises
Why are aims and objectives helpful to business?
Define the nature and purpose of the business
Enable to plan for the future
Can measure performance over time
Examples of business aims producing conflict
MAXIMISATION OF PROFITS VS GROWTH
Investing in new machinery/ opening new stores can be expensive
MAXIMISATION OF PROFITS VS SOCIAL RESPONSIBILITY
Make donations/ sponsor events can be expensive
PROVIDE A SERVICE VS SURVIVAL
Hospital wants to provide a service (caring for people’s health) but may be to costly and have to close A & E to survive.
What are the ethical issues associated with business aims
Environmental issues
Employee working conditions
Equality
Social responsibility
Explain ethical issue associated with business aim - Environmental Issues
Businesses activities should be undertaken in ways which protect the environment and minimise pollution. Ensure they care for the environment by planting trees. Providing litter bins, use recycled paper, sell biodegradable materials and not using plastic bags.
Explain ethical issue associated with business aim - employee working conditions
Most valuable resource. Must provide safe working conditions and ensure health and safety of staff. Fair wage, break room, clean toilets and heating work spaces.
Explain ethical issue associated with business aim - Equality
Employers must treat all stakeholders equally and not discriminate against people on grounds of age, gender, religion, race, sexuality, nationality or disability.
Explain ethical issue associated with business aim - social responsibility
Cooperate with the local community, volunteer at local schools, purchase equipment for schools, support charity events and sponsor local events. Refuse to trade goods made from countries that exploit workers.
What are stakeholders?
People or organisations who have an interest in the operations of a business. The decisions and actions of the business have an impact on all stakeholders.
Examples of stakeholders
Owner Directors Shareholders Managers Producers/suppliers Consumers/ customers Lender Employees Pressure groups Local community
Examples of stakeholders aims differing
SHAREHOLDERS may wish to withdraw dividends, whereas the DIRECTORS may prefer to retain some of the profits to build up reserves for the future
CONSUMERS require that the business offers them quality products at fair prices, whereas MANAGERS may charge high prices to increase sales revenues.
PRODUCERS aim to sell their products profitability to businesses, whereas a MANAGER seeks to acquire supplies at the lowest possible cost.
Explain stakeholders interest in the business- Owner
Owner - profit, good brand image
Explain stakeholders interest in the business - director
Directors - dividends, salary, bonus, growth
Explain stakeholders interest in the business - manager
Managers- job security, good salary
Explain stakeholders interest in the business - customer
Consumers/ customers- fair prices, high quality products/services, wide variety of goods, good customer service, good after-sales service
Explain stakeholders interest in the business - supplier
Producers/suppliers- regular orders, payments on time , efficient ordering system
Explain stakeholders interest in the business - lender
Lender- loan repayments on time , growth
Explain stakeholders interest in the business - pressure groups
Pressure groups- fair wages, job safety, environmental
Explain stakeholders interest in the business - shareholders
Shareholders- dividends, growth, expansion
Explain stakeholders interest in the business - employees
Employees- job security, good wages/promotion opportunities, good working conditions
Explain stakeholders interest in the business - local community
Local community - providing jobs, no pollution, improving services in local community
