They influence the business
through the way they make
decisions and work
They hugely influence small businesses
mainly, i.e. customers not buying, suppliers
giving bad quality and government setting tax
Sometimes stakeholders aims
conflict, this is because they want
For example, owners want to maximise profits whereas
employees want higher pay and obviously higher pay will
decrease the profit margin, as a result they must
Aims and objectives
The 4 main aims and objectives are: Profit,
Increased market share, Growth and Survival
Within the first year, all businesses aim for is
survival, they don't want a huge profit - they
just don't want to go bust.
An aim is a long term 'wish', whereas an objective
is shorter-term and more precise.
Social Enterprise - An organisation with social objectives,
aimed at stakeholders such as members, customers and
Co-operative - a group that shares in a
business to insure a fair deal for
Co-operatives and mutual societies want
to make sure that their members
(customers and employees) get a fair deal.
Mutual society - a society set up
to provide benefit to all its
A mutual society is a type of co-operative -
they were set up to provide members with
Charity - a
business that tries
to do the most
good for its chosen
Unlike a charity, that raises fininace from donations, a social enterprise
acts like a real company, selling products and providing services in order
to raise the finance needed to progress and it will donate all of its profits
to the desirable cause.
The primary sector is the first stage of the production process that deals
with raw materials, e.g. fishing, farming, forestry, mining quarrying and
This is the second stage of the production process. This is involved with taking
the raw materials from the primary sector and using them to manufacture
finished goods. some examples of businesses in the secondary sector are car
manufactures, steel works and builders.
This is the third and final stage of the production process.
All of the businesses in this sector are service providers,
this is how the goods made in the primary and secondary
sectors are sold to consumers.
Examples of businesses in the tertiary sector are
retailers, transport, banking and communications.
Business ownership and location.
Types of ownership
This is the simplest structure of ownership -
it is a business that's owned and run by one
person and has unlimited liability.
Partnerships are agreements between two or more people to
share the responsibilities, organisation , workload and profits
(or lossess) and also has unlimited liability
Private limited companies (LTD)
LTD's have the benefit of limited liability, however as well as this, it could
also bring problems such as intorducing more stakeholders with diffrent
aims and objectives,
As an LTD, the company has the ability to sell shares, but only to
friends and family and only if the rest of the shareholders agree.
Public limited companies (PLC)
Most LTDs become a PLC in order to raise large amounts of capital
This can be done because as a PLC you have the ability to sell
shares on the stock exchange - this is beneficial as it's a good
way to raise a large amount of finance however because you
can sell to the general public, shareholders may put their own
intersts above the interests of the company.
Every year, each shareholder is invited to attend the Annual General Meeting
(AGM), although this is not required it is a way to help influence your ideas
upon the company.
How to set up a business
Firstly, you draw up a memorandum of association, next
you draw up articles of association, then shares are issued
before you send these details to the Companies House,
after that you will get your certificate of incorporation and
you can begin trading.
The workforce in business
Recruitment and Selection
Training and Appraisal
Training is making sure that the works have the knowledge and skills necessary to do the
job. It's mandatory as it enables the business to operate as efficiently as possible.
Development is different - training benefits the the business whereas development benefits the worker more. The process of
development is where the worker develops their skills and knowledge and may involve for example professional examinations
and or futher study.
The first time the worker comes to the business, they will experience induction training, this will conist of rules and
regulations, health and safety measures and they will be able to get aquainted with their colleagues this is beneficial
because it means that once the worker arrives, they know what to do and who to talk to should they need anything.
There are two types of
training and off-the-job
On-the-job training is where the employee will be trained internally, on site. This is beneficial because they will be
farmiliar with the equipment, the technique and they will know what is expected off them, as well as this it's
usually cheaper so for a business this is perferable. A drawback to this is if the mentor is being lazy, the trainee
may copy their mistakes and pick up the wrong technique thinking that's how it's done.
Off-the-job training is where the worker is trained externally - this usually takes place on specialised courses and as a result, it is often more
expensive. However once they are trained and qualified, they may bring new ideas to the business and are usually better trained.
Appraisal is the process whereby you see how well a worker is doing. It's an
opportunity to exchange views with their superior and can result in a possible
reward or even lead to promotion.
Businesses now expect employees to keep retaining and improving upon skills they already have - this is called lifelong learning.
Recruitment is the process by which a business finds new employees.
Recruitment needs to take place when a need for new staff is identified, there are many reasons for
this, such as the expansion of the business, old staff leaving or the business requiring new skills.
There are two types of recruitment, internal and external recruitment - internal is offering the job to someone
already within the business i.e. promotion and external is advertising the job for people outside of the
organisation to apply.
If the business does choose to recruit, the process is as follows, first you must advertise the job, within this you must contain a job description - exactly what will
the worker be doing? as well as that, you need a person specification - this will contain the skills required for the person to do the job. sfter that, the HR
department will look at the applicants and short list the best and most suited candidates. Next there will be an interview process, a person will be chosen and
they will finally receive an appointment to do their induction training and will then begin to work.
Piece rates reward
workers for the
number of items
made, this will
encourage speed but
at the expense of
Time rates reward the people
who work more - this is where
the worker is payed an
amount per period, usually
hourly and is common in
Commission is a reward pay for increased
sales, it's usually a percentage of the sales
you make, you get to keep and is generally a
small percentage on top of your monthly
There are two methods of
motivation: monetary and
Monetary methods are like bonuses
and rewards, this will motivate
employees as they will all want to win
the bonus, but can result in
de-motivation if employees are
Non-monetary methods include fringe benefits - this is for example a company car or a gym
membership. As well as that, there's job rotation, this is giving workers multiple different things to
do so they're kept interested. There's job enrichment, this is similar to job enlargment as you're
giving the employee more freedom and responsibility, if they feel valued and trusted they're more
likely to work harder.
A chart can be made to show how a business is organised, like the one above.
The number of subordinates below each
person can be measured and is known as
the span of control.
There are two kind of structures: tall and flat. The one used here is tall, there are
lots of layers and having a flat structure means one person is in charge of a lot more
people. For communication, a flat structure is better because they all report to one
person, a clear message is given but if it has to pass through all of the layers, things
may be changed and it will be less efficient. For the workers, a tall structure is
better, this is because if you're at the top, you're not in charge of too many people,
you can cope and if you're at the bottom, there are a lot of opportunities for
There are two types of growth a business will experience, one is internal and one is external.
Internal growth happens from within the company, this usually moves at a gradual pace and is done by increasing sales,
using new technology, widening the product range resulting in you expanding into different markets and winning a
larger share of its main market.
External growth is where a business expands by joining another business in a merger, or
even a hostile takeover -this will result in a larger market share and a more well known brand
name leading to an increase in sales and an increase in revenue.
Communication consists of 5 parts: the sender, the message, the medium, the receiver and feedback.
Formal communications have a certain format and will be
used for certain messages, an example is an AGM.
Informal communications can take place at any time using any medium. This can be as
effective as formal communications and can be done efficiently by the use of IT.