Understanding Business Flashcards
sectors of industry
primary - extracting natural materials
secondary - manufacturing and constructing
tertiary - providing a service
quaternary - researching and providing information and knowledge
private limited companies A&D
A - large amounts of capital raised through selling shares
- large business considered less risky by lenders
- shareholders have limited liability
- shares can be given to employees to motivate them
D - must follow rules from Companies Act
- have to share profits with shareholders
- no control over who purchases shares
- can be taken over by competitors
multinationals
A - larger market meaning more customers
- profits/shares will be greater
- reputation can be advanced leading to customer loyalty
D - business can be difficult to control over so many countries
- moving stock over countries increases transport costs
- language barriers need to be overcome
narrow span of control problems
- managers time is at a premium and can lead to snap decisions
- less control, staff may make mistakes
- less time for planning
wide span of control problems
- close inspection can put staff under pressure
- fewer staff to share ideas and work load with
how to develop corporate culture
- making shop/office layout relaxed benefits employees
- rewarding culture
- flexible working arrangements
tall structure A&D
a - each employee knows their role and who to report to
- with many levels comes more opportunities for promotion
d - communication takes longer going through levels slowing down decision making
- managers can supervise staff more closely adding to pressure
flat structure a&d
a - info can be passed quickly between levels
- can respond quickly to external factors
- managers delegate more tasks to staff raising moral
d - less levels means less promotional opportunities
- less staff to help with tasks or share ideas with
centralised a&d
a - procedures are standardised
- low risk of important info leaking
d - business reacts slowly to changing external factors
- less responsibility given to employees lowering morale
decentralised a&d
a - more employees are empowered raising morale
- business reacts quickly to changing external factors
d - local branches could end up competing with each other
entreprenurial structure a&d
a - decisions can be made quickly with little consultation
- staff know who to report to
d - if owner is busy key decisions cannot be made
- no chance for staff to show initiative lowering morale
matrix structure a&d
a - staff can use their expertise
d - staff can be confused as to who to report to
functional grouping
organisation split into departments which represent the main functions of the business
a - staff will gain more expertise in their own department
- career paths can be created within departments
- team working improves
d - communication barriers between departments
- decisions take longer to make
- staff loyalty to department rather than business
product/service grouping
groupings made around different products/services
a - allows business to be more responsive to changes in the market
- expertise will evolve about products within the department
- easier to distinguish between successful and unsuccessful products
d - groups may begin to compete with each other
- difficult to share equipment
customer grouping
when individual needs of customers are different, businesses set up to have closer contact with customers
a - customer needs are identified as a priority, building customer loyalty
- business can respond quicker to customer needs
- customers get feelings of personal service
d - large staffing costs can occur
- if staff changes personal service can be lost
