Business Chapter 1
What is a business
A business is a decision making organisation that uses outputs to produce goods and services
What is an entrepreneur
He or She is an individual that organises manages and plans a business
What are the different stages of production
Primary sector= Collecting Raw materials
Secondary sector= Manufacturing and Construction
Tertiary sector= Providing Services
Quaternary sector= Knowledge based activities and Technology
The two Sectors of a Business
Business in the Private sector are owned by private individuals
Business in the public sectro are owned by the government
Privately held has limited liability, cant make money from selling shares
Publicly held has limited liability but can make money selling shares via the stoc market
What is liability
Limited= Restriction on the money that owners of a company can lose
Unlimited= Partnerships that are legaly responsible for all the money that they own to anyone after they go bankrupt
For Profit Organisations
Sole traders= owned by one person
Partnership= owned by 2-20 people
Private limited= Cant raise share capital from public, shares are sold privately
Public limited= sells its shares to general public Via stock market
Social enterprise= revenue generating business with social objective as a priority
Non Profit Organisations
NGOs= are funded by donations and individual donors, aim to suport a social cause
Charities= raise Funds to suport a cause beneficial to society
All Business Organisations
Sole trader= one person who runs his business
Partnership= owned by 2-20 people
Cooperatives= owned by the members of society to deal with a social problem
Social Enterprise= business that prioritises social objective
Joint Venture= 2 companies making one joint company but still existing separately
Merger= 2 companies merging into a new company
Takeover= one company buying over 50% of another companys shares to gain controlling interest
Acquisition= One company completely buying over the other
Conglomerant= A business that operates in different markets
Two different Business statements
Mission= sets the overall purpose of the business
Vision= The future goal of the business
What is CSR
Corporate Social Responsibility is a strategy taken by business to not just grow in profits but to contribuite to societal goals, such as ethical and enviromental responsibilities
Draw stake holder map
include: Level of power on side (Low High)
Level of interest on top (High low)
High High= key players
High Low= Keep satisfied
Low Low= Minimal effort
Low High= keep informed
What are scale of Opperations
The max output that can be achieved using the available resources
this can only be increase long term by increasing all resources
Economies of Scale
Reducing a firms average unit cost whilst increasing output
Internal= anything the business does to make this happen (change producer, large scale machines, ect )
External= anything that hapens outside of the business controll that allows this to happen ( advanced transport methods, good technology, Governemnt tax reduction)
Diseconomies of scale
Factors that cause the average unit cost to increase when output increases
Internal=poor coordination, lack of controll, demotivated workers, lack of equipment, beurocracy
External= taxes, regulations, or resorce scarcity
What is a suply chain
a netwrok between a company and its supliers to produce and distibuite products
Integrations
Horizontal Integration= same industry, same stage of production
Forward vertical integration= manufacturer acquiring retailers
Backward Vertical integration= retailer acquiring manufacturer