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Impact on enterprise on a country’s economy-
employment creation, economic growth, firms’ survival and growth, innovation and technological change, exports, personal development, increased social cohesion
Why do new businesses often fail-
Lack of record keeping, lack of cash and working capital, poor management skills, changes in business environment
Major challenges faced by entrepreneurs-
identifying successful business opportunities, sourcing capital (finance), determining a location, competition, building a customer base
Public sector-
comprises organisations accountable to and controlled by the central or local government
Private sector-
comprises businesses owned and controlled by individuals or groups of individuals
Command economy-
economic resources are owned, planned, and controlled by the state
Memorandum of association-
this states the name of the company, the address of the head office through which it can be contacted, the maximum share capital of which the company seeks authorisation and the declared aims of the business
Articles of association-
this document covers the internal working and control of the business-for example if the names of the directors and the procedures to be followed at meetings will be detailed
Joint venture-
two or more businesses agree to work closely together on a particular project and create a separate business division to do so
Holding company-
a business organisation that owns and controls a number of separate businesses, but doesn’t unite them into one unified company
Public corporation-
a business enterprise owned and controlled by the state, also known as nationalised industry
Advantages of public corporations-
managed with social objectives rather than solely with profit objectives, loss making services might still be kept operating if the social benefit is great enough, finance raised mainly from the government
Disadvantages of public corporations-
tendency towards inefficiency due to the lack of strict profit target, subsides from government can also encourage inefficiencies, government may interfere in business decisions for political reasons e.g., by opening a new branch in certain area to gain popularity
Different measures of business size-
revenue, capital employed, number of employees, market capitalisation, market share
Revenue
is the total sales made by a business in a given time period
Capital employed-
the total value of all long-term finance invested in the business
Market capitalisation-
total value of a company’s issued shares- calculated by= current share price x total number of shares issued
Market share-
sales of the business as a proportion of total market sales calculated by= total sales of a business/ total sales of the industry x100
Significance of small and micro businesses-
many jobs are created by small firms, often run by dynamic entrepreneurs so provide competition for larger firms, small firms often supply specialist goods, all great businesses were once small, small firms can enjoy lower average costs which benefits pricing for consumers
Internal growth-
the expansion of a business by means of opening new branches, shops, or factories (also known as organic growth)
Hierarchy of objectives from top to bottom-
aim, mission, corporate objectives, departmental objectives, individual targets
Mission statement-
a statement of the businesses core aims phrased in a way to motivate employees and to stimulate interest from outside groups
Common corporate objectives-
profit maximisation, profit satisfying, growth, increasing market share, survival, corporate social responsibility, maximising short term revenue, maximising shareholder value
Corporate social responsibility-
applies to those businesses that consider the interests of society by taking responsibility for the impact of their decisions and activities on customers, employees, communities, and the environment
Decision making framework-
set objectives, asses the problem or situation, gather data about the problem and possible solutions, consider all decision options, make a strategic decision, plan, and implement the decision, review its success against the original objectives
Factors that determine the corporate objectives of a business-
corporate culture, the size and legal form of a business, public or private sector business, the number of years the business has been operating, divisional, departmental, and individual objectives
Functions of management-
setting objectives and planning, organising resources to meet the objectives, directing, and motivating staff, coordinating activities, controlling, and measuring performance against targets
Important leadership roles within a business-
directors, manager, supervisors, workers representatives
The best style of leadership depends on-
the training and experience of the workforce and the degree of responsibility that they are prepared to take on, the amount of time available for consultation and participation, the attitude of managers or management culture, the importance of the issues under consideration
Emotional intelligence-
the ability of managers to understand their own emotions and those of people they work with to achieve better business performance,
Daniel Goleman theory suggested managers should improve on-
self-awareness, self-management, social awareness, social skills
Time based wage rate-
payment to a worker made for each period of time worked eg one hour
Piece rate-
payment to a worker for each unit produced
Salary-
annual income that is usually paid on a monthly basis
Commission-
payment to a salesperson for each sale they make
Bonus-
payment made in addition to the contacted wage or salary
Performance related pay-
a bonus scheme to reward staff for above average work performance
Profit sharing-
a bonus for staff based on the profits of the business- usually paid as a proportion of basic salary
Fringe benefits-
benefits given separate from pay by an employer to some or all employees
Job rotation-
increasing the flexibility of employees and the variety of work they do by switching from one job to another
Job enlargement-
attempting to increase the scope of a job by broadening or deepening the tasks undertaken
Job redesign-
involves the restructuring of a job- usually with employees’ involvement and agreement to make the work more interesting, satisfying and challenging
Quality circles-
voluntary groups of workers who meet regularly to discuss work related problems and issues
Worker participation-
workers are actively encouraged to become involved in the decision making of the organisation
Team working-
production is organised so that groups of workers undertake complete units of work
Human resource management-
the strategic approach to the effective management of an organisations workers so that they help the business gain a competitive advantage
HRM roles-
workforce planning, recruitment, and selection, developing employees, employment contracts, employee morale and welfare, incentive systems, monitoring
Employee appraisal-
the process of assessing the effectiveness pf an employee judged against pre-set objectives
Marketing-
the management task that links the business to the customer by identifying and meeting the needs of customer profitably- it does this by getting the right product at the right price to the right place at the right time
Random sampling-
every member of the target population has an equal chance of being selected
Systematic sampling-
every nth item in the target population is selected
Stratified sampling-
this draws a sample from a specified sub group or segment of the population and uses random sampling to select an appropriate number from each stratum
Quota sampling-
when the population has been stratified and the interviewer selects an appropriate number of respondents from each stratum
Cluster sampling-
using one or a number of specific groups to draw samples from and not selecting from the whole population e.g., using one town or region
Arithmetic mean-
calculated by totalling all the results and dividing by the number of results
Mode-
the value that occurs most frequently in a set of data
Customer relationship management-
using marketing activities to establish successful customer relationships so that existing customer loyalty can be maintained
Role to the customer 4 Cs-
customer solution, cost to the customer, communication with the customer, convenience to the customer
Customer solution-
what the firm needs to provide to meet customer needs and wants
Cost to the customer-
the total cost of the product including extended guarantees, delivery changes and financing costs
Communication with the customer-
providing up to date and easily accessible two-way communication links with customers to both promote the product and gain back important consumer market research information
Convenience to customer-
providing easily accessible pre-sales information and demonstrations and convenient locations for buying the product
How do managers determine price-
cost of production, competitive conditions in the market, competitors prices, business and marketing objectives, price elasticity of demand, whether it’s a new or existing product
Efficiency-
producing output at the highest ratio of output to input
Effectiveness-
meeting the objectives of the enterprise by using inputs productively to meet customers’ needs
Operations planning-
preparing input resources to supply products to meet expected demand
CAD- computer aided design
is the use of computed programs to create 2D or 3D graphical representations of physical objects
CAM- computer aided manufacturing
is the use of computer software to control machine tools and related machinery in the manufacturing of components or complete products
Working capital definition and calculation
the capital needed to pay for raw materials, day to day running costs and credit offered to customers, in accounting terms= current assets- current liabilities
Liquidity-
the ability of a firm to pay its short-term debts
Equity finance-
permanent finance raised by companies through the sale of shares
Gross profit margin-
this ratio compares gross profit (profit before the deduction of overheads) with revenue= gross profit/ revenue x100
Operating profit margin-
this ratio compares operating profit (net profit margin) with revenue= operating profit/ revenue x100
Liquid assets calculation
current assets- inventories
