business A292

eloise.ives
Mind Map by eloise.ives, updated more than 1 year ago
eloise.ives
Created by eloise.ives almost 6 years ago
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Mind Map on business A292, created by eloise.ives on 04/12/2014.

Resource summary

business A292
1 the need for business activity
1.1 needs are essential for us to survive. eg water food clothing warmth
1.1.1 goods: things we can touch and see that we want need. services: can't touch or necessarily see but are provided
1.1.1.1 Primary: business extracts raw materials from natural resources. Secondary: take raw materials and turn into finished product. Tertiary: business provide service and sell
1.1.1.1.1 Capital Goods: used to produce other goods eg cranes. Consumer Goods: sold to and used by individuals for personal use eg DVD
2 Aims and Objectives
2.1 Aims: long term goals of the business, generalised eg make profit. Objectives: series of steps a business takes to achieve its aims. more precise than aims, can often be measured eg airlines, carry 2mill passengers by a certain date.
2.1.1 SMART- Specific Measurable Achievable Realistic Time related (factor to achieve aims)
2.1.1.1 Aims: Survival, profit, growth, maximising sales revenue
3 Stakeholders
3.1 individuals or groups with an interest in the business
3.1.1 Customers: buy goods and services Owner/Shareholder: invest their money and hope share will grow Suppliers: supply goods and services to a business Managers: people who were employed by the owner to manage the business Employees: work for the business Pressure Groups: try to influence the way a business works Competitors: find out what others are doing so that they can improve Local Community: interest in the business development Government: a body of elected parliament who run the county.
3.1.1.1 Social enterprise: a business enterprise that is run fir the benefit of the community, with any profits put back into community projects
3.1.1.2 Soletraders: an individual who may or may not employ people, but who owns and operates the business and has unlimited liability eg hairdresser
3.1.1.2.1 Partnership: two people owning a business
3.1.1.3 Advantages: Capital- small amount Profits- kept by owners Control- more control Flexibility- choices Privacy- no publish intro Easy to run/set up Tax advantages
3.1.1.3.1 Disadvantages: Long hours Illness- might stop business Unlimited liability- risk of losing possessions Lack of continuity- no pass on after death Raising capital- may need to borrow money Limited specialisation
4 Type of business organisation and ownership
4.1 Incorporated: a separate legal entity which will be owned by its shareholders eg private limited company and public limited company
4.1.1 THEY HAVE: Limited Liability: the partner or investor can't lose more than they invested into the business. The investor or partner is not personally responsible for debts and obligations of the company in the event that these are not fulfilled. Separate Legal Entity: the business has a separate legal identity form its owners; it can start legal action against another business in order to protect itself. Others can take legal action against them. Tax on Profits: corporation tax is paid on any profit. Finance: can be raised through the sale and issue of shares. Financial info: info available to shareholders and general public. Insolvency: occurs when a business is unable to pay its debts.
4.2 Unincorporated: a type of business organisation which has unlimited liability eg sole proprietors
4.2.1 Unlimited Liability: owners are personally liable for any and possessions may be taken. Tax on Profits: income tax is paid on the profits. Community: the business ceases on the death of an owner. Financial Info: private to the owner/business. Bankruptcy: happens if the business is unable to pay debts
5 Location
5.1 Cost of land: expensive land may mean higher products eg SE> NE. Availability of Labour: level of unemployment can vary, workers skill, level of pay, rate. Transport and infrastructure: business can gain access to roads, goods may have to be transported. Climate and physical Geog: the location of agriculture activities is often influenced by both C+PG. Target market: most businesses that service like to be near markets they can serve. Government Incentives: often other financial incentives, to start a new business or relocate. Type/Nature of product: ship building will be near coats products are very often specialised.
5.1.1 Growth
5.1.1.1 Replaces survival, higher sales and profit, better returns for owners, to meet and increase demands, economies of scale, increased market share, increased power in the market
5.1.1.1.1 Organic growth: Internal growth occurs when business expands through increasing output and sales itself and without taking other any other business. Inorganic growth: manager- coming together of 2 companies, takeover- one company buys more than 50% of the shares
6 Control
6.1 Shareholders > Board of directors (control the company) > Chairman (takes responsibility of BofD) > Managing Director (responsible for running of business) > Finance Director - Production Director - Personal Director > who are incharge of specific sections of the business > Managers (who run the business on a day to day basis) > Other employees (who carry out a variety of tasks)
6.1.1 PLC can quote shares in a stock exchange. Shares in a PLC can be bought + sold through the stock exchange -theres no need to consult the owners for selling + buying shares. LTD shares are normally sold to close friends and family.
7 Private Limited Company (LTD)
7.1 Advantages: Shares- can be issued to investors in exchange for money as a means of raising capital. Legal identity: separated from its owners. Can take legal action against people or company. Community- subject to agreement by shareholders the business can be sold + shares can be
7.1.1 Disadvantages: Lack of Capital- existing shareholder unable to provide. Dividends- most shareholder expect a dividend. Sale of shares- restrictions; can't offer shares to general public to raise finance. Submitting info to registrar- time consuming and costly
8 Public Limited Company (PLC)
8.1 Advantages: Limited Liability- no risk of personal bankruptcy. Ability of raising finance- able to offer shareholder sales, more capital. Additional funds- can be raised from other sources.
8.1.1 Disadvantages: Cost of Setting Up- complicated and pricey. Financial info- general public is allowed to request a copy of companies accounts. Dividends- shareholder expect profit. Take Over- shares in company can be easily traded on stock exchange. Shareholders- Own the company but unless they have a large number of shares they will have very little say.
8.1.1.1 Key terms: Incorporations- process of becoming a limited liability company. Registrar of companies- person responsible in the UK for maintaining records relating to the activities of PLCs + LTDs. Board of Directors- people usually elected by shareholders to represent their interests + important decisions. AGM- yearly meeting of shareholders. Capital-money usually raised through sales of shares to investors.
9 Employment and Retention
9.1 Internal Recruitment: appointing someone within the business to a position
9.1.1 Methods of internal: notice boards, news letters, memos, email, intranet.
9.1.1.1 Advantages: Familiar with business, cheaper and faster, opportunity for promotion, improves staff morale + motviation
9.1.1.1.1 Disadvantages: Range of applications limited, no new skills or ideas, lead to staff discontent if not chosen
9.1.2 External: appointing someone outside the business to a position
9.1.2.1 Methods: internet, media, recruitment agency, job centre
9.1.2.1.1 Advantages: large choice, new people/ideas, experience, flexible salary
9.1.2.1.2 Disadvantages: long process, costly, difficulty chosing
9.1.2.1.2.1 key terms: Selection- process of choosing candidates. Needs Analysis: how a business decides how many workers to have. Job Description: Main duties or responsibility of worker. Agency: specialist agency that carries out all tasks and selects worker on behalf of organisation.
10 Franchise
10.1 An already established business for sale to other businesses the right to use its products, services and branding usually in a defined location.
10.1.1 Franchisee: individual benefitting from someones trading name + experience. Franchisor: the business granting the franchise.
10.1.2 Advantages: No competition in defined area, successful idea, already established, advertising paid for, training and advice, reduce risk of failure. Disadvantages: Supplies purchased from franchisor, large initial capital must be raised, annual royalty payment based on % of profit, not total control, loses have to be paid for by franchisee.
11 Co-operatives
11.1 Societies which operate for the benefit of members
11.1.1 Charities: to generate an income to fund their charitable work -limited companies
11.1.1.1 Advantages: receive wide range of tax breaks, people offer time and energy to registered charities. Disadvantages: must comply with charities legislations, must produce annual report and return
11.1.1.1.1 key terms: Royalty- a payment made to the franchisor based on the sales revenue of franchise, Globalisation- worldwide independence of business activity, Public Sector- business activity which is owned by local or national gov.
11.1.2 Multinational companies: large company that has its headquarters in one country and production facilities or sales in 2+ countries
11.1.2.1 Advantages: locate where production lower, manufacture in large amounts, closer ti markets around world. Disadvantages: communication problems, transport costs, exchange rates, different legal requirements.
12 Failure
12.1 Management: poor management will = failure if they don't spend any money or time at work. Demand: no demand for products, need to meet demands of customers. Location: wrong location eg paint shop in theme park, Competition: too many business selling the same product, Poor Quality: bad quality will make customers not want product, Profit: insufficient profit
13 Motivation
13.1 The will to work. Five levels of human needs- physiological, safety, social needs, self esteem, self fulfillment
13.1.1 Rewards: salary, promotion, award schemes.
13.1.1.1 Non Financial Motivation: fear- threats, Job Rotation- performing other jobs, Job Enrichment- more responsibility, Team Work- needs training, Job Enlargement- different tasks within jobs.
13.1.2 Advantages: better productivity, better quality, lower levels of absenteeism, lower levels of staff turnover, lower training and recruitment costs.
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