Unit 1: 1.1 + 1.2 Flashcards
Business functions
human resource, marketing, finance, operations.
What is a business?
organization that tries to meet the needs and wants of people.
What is an entrepreneur?
someone who takes the financial risk. (also reap the rewards)
invests
idea for new business
accepts responsibility
accepts possible risk of failure
What does human resources do?
management of people within company. (includes recruitment and workforce planning) to work towards organizational objective.
What does finance do?
management of money, credit banking, and investments. keeping track of cash flows in the company.
What does marketing do?
promoting company’s products/services to more customers this is what connects the customers to the company.
does so by getting the right product at the right price in the right place with the right promotion.
What does operations do?
or some times referred to as production and controls the procedures of the production process. converts materials into finished product, making them ready for sale.
What is the secondary sector?
manufacturing of goods… ADD VALUE to natural resources to sell.
What is the primary sector?
extraction/conversion of resources
What is the tertiary sector?
provide a service. (transportation, wholesale/retail, advisor/consult)
What is the quaternary sector?
knowledge based/research heavy and development, highly educated
Horizontal integration
business merge with another business in the same sector. they do this to ADD VALUE or make their service better.
Vertical integration
business merge with another business in a different sector. they do this so that it is efficient and don’t make extra.
ex: wegmans working in all sectors
Why start a business? (pros)
- losing a job may provide needed push
- independence
- financial security
- seeing a market opportunity
- social connections may urge them to start
- risk-taking or challenge-seeking personality
The problems faced by businesses in the first years? (cons)
- competition
- building the customer base
- lack of money
- lack of record keeping
- poor management skills
6.changes in the working environment
*these problems can appear at any stage of business but usually fail during the first months being riskiest of all.
What is a business plan?
a written document that describes a business, its objectives and strategies, the market it is in, and its financial forecasts.
Advantage of a business plan?
allows you to fully investigate own business idea and to clarify thoughts and ideas. allows others to examine plan and give feedback
Economic development and its connection to business sectors?
the more economically developed a place is, the higher up in the sectors they are.
How does one start a business?
business plan to present to potential investors
get money (capital) loans savings investments, IPO
register with government organization
set-up bank account, way that customers pay
market, outreach selling service
What four things are important for the success of a business?
CESC
change
ethics
sustainability
creativity
to ADD VALUE and make better
The creativity in CESC
vital for a business to remain innovative, relevant, and competitive.
there is two types of creativity: adaptive and innovative
Adaptive creativity
ADD VALUE to a product or service
Innovative creativity
create a brand NEW product/service
The sustainability in CESC
conserving resources, make things last longer.
there are three types of sustainability: environmental, social, economic
Environmental sustainability
natural resources, using them wisely
Social sustainability
using resources in such a way that benefits the community that we live in, maximize the quality of life
Economic sustainability
use resources responsibly/effectively in terms of money
The ethics in CESC
what is right. fair or unfair?
The change in CESC
modification or change through creativity = ADD VALUE
Types of businesses
public sector or private sector
Public sector
is government operated which means:
access for everyone
funded by TAXES
not worried about profit
Private sector
owned by individuals which means:
driven by profit
add value to make better
Types of private sector businesses
sole-trader
partnership
small/mid sized businesses
large corporations and multinationals
professional and trade associations
trade unions
What is a sole trader?
business that is owned/operated by ONE.
Advantages of sole traders
autonomy
get all profit
easy to start and costs less
decisions made FAST
personalize for customer
do not have to share financial records with public
Disadvantages of sole traders
competition
unlimited liability
workload
lack of continuity (consistent operation of business)
higher cost of production compared to large scale companies
What is a partnership?
business operated/owned by 2 or more people.
Advantages of a partnership
specialize (divide work the 4 functions of business)
continuity (consistency of business)
more financial strength
do not have to publicize financial records
Disadvantages of a partnership
unlimited liability
conflict between owners and on decisions
there must be a large amount of mutual trust
may still face money problems
What are companies?
business that is owned by its shareholders
Types of limited companies?
private and public
What are private limited companies?
business operated/owned by family and friends. only family and friends can invest money
Advantages of private limited companies
limited liability (only responsible for what they invest in)
control (by ONLY family and friends)
Disadvantages of private limited companies
lack of investment opportunities creating money problems
What are public limited companies? (join-stock companies)
business operated/owned by investors. anyone can invest and get a share
Advantages of public limited companies
limited liability
access to money by investment
Disadvantages of public limited companies
loss of control over the company and decisions bc so many people are owners
regulations and laws to obey
Floatation
private company move to public using an IPO (initial public offering) where the PLC sells all or part of its company to the stock market to gain capital.
Privatization
public move to private meaning they buy all the shares back
Why would investors buy shares in limited company?
dividends
capital growth
voting power
Dividends
payment to shareholders based on the profit of the company.
Capital growth
overtime shares may increase or decrease and the shareholders hope to in the future sell the share for higher
Voting power
able to influence decisions made in company and vote more the more shares they hold.
