Experimental

• Ownership and control
• Sole trader:

  • Also known as a sole proprietor
  • Single owner of a business who makes all decisions
  • Has unlimited liability
  • Not much capital needed to start up, but can make it harder for the business to grow
  • May suffer from disadvantages such as lack of economies of scale and specialisation/division of labour
  • Aims may not just be to make a profit, but also to have the desired lifestyle or just to survive
  • Lack of continuity if the owner dies
• Partnership:

  • Agreement between two or more people to own and take responsibility for a business
  • Shares ownership, liability, profit, decisions, jobs, knowledge, and skills
  • Deed of partnership includes details on money put in, profit sharing, responsibilities, and ending the partnership
  • Unlimited liability
  • Lack of continuity if a partner dies
  • More capital than sole traders, aim may be to expand
  • Disagreements between partners may make decision-making difficult
  • Person who does the most work may not get the greatest reward
• Limited companies:

  • Private limited companies (Ltd) and public limited companies (Plc)
  • Shares in private limited companies cannot be sold to the general public
  • Get capital by issuing shares
  • Limited liability
  • Legal entity
  • Public limited companies can sell shares on the stock exchange
  • Divorce of ownership and control
• Franchises
• Franchise:

  • Company sells the right to use their name and sell their goods and services
  • Franchisee buys the right and pays a fee to the franchiser
  • Franchisee has less risk and lower costs, but less control
  • Pays a royalty on the year's turnover
  • Many well-known brands are franchises
• Public sector organisations:

  • Owned by the government and run on behalf of the people
  • Examples include the Army, the BBC, and the Post Office
  • Some services are public sector because they are considered vital
  • Privatisation means putting public sector organisations into private hands
  • Nationalisation means taking a private business into public ownership
• Stakeholders:

  • People or organisations with a financial interest in a business
  • Owners' usual objectives are survival, profit, and growth
  • Early objectives may be to penetrate the market and break even
  • Objectives usually change to making or increasing profit after the first year
• After the early years, businesses may wish to expand to maximize sales and profit

  • Sole traders may be more interested in satisfying rather than maximizing profit
  • Managers may have the same objectives as owners or want to increase their own status
  • Suppliers want reliable businesses for repeat orders
  • Employees want reasonable pay and good, safe working conditions
• Stakeholders in a business include:
• Owners who want to reduce costs and increase profits
• Employees who want reasonable pay, good working conditions, and job security
• Creditors who want to be paid the money owed to them
• Customers who want a good product, value for money, and after-sales service
• Conflicts in objectives:
• Employees want more pay
• Owners want to reduce costs
• Customers want low prices
• Suppliers want to be paid on time
• Customers want a high-quality product
• Objectives and Growth:
• A business can be measured in size by sales turnover, market share, number of employees, value of the business, and number of locations it covers
• Growth can lead to economies of scale, market domination, and can be achieved through internal or external methods
• External growth can be through mergers or take-overs
• Monopoly is when a firm controls a large part of the market and can set prices
• Recruitment and Selection:
• Recruitment and selection is about finding and choosing the best employees for an organization
• Advertising for jobs can be done internally, externally, at job centers, local radio, newspapers, etc.
• Candidates may need to write a letter of application, fill in an application form, provide references, and possibly a CV
• Shortlisting candidates for interviews involves studying application forms and selecting based on job criteria
• Training:
• Training is important for introducing new employees, explaining dangers in the workplace, motivating employees, and improving efficiency
• Training can be on-the-job or off-the-job, with on-the-job being cheaper and more relevant
• Induction training introduces new employees to the business, workplace, and job
• Motivation:
• Motivation encourages workers to work harder and be more efficient
• Maslow's hierarchy of needs includes survival, security, social needs, status, and self-actualization
• Herzberg identified motivators like doing a job well, trust, responsibility, appreciation, and promotion
• Hygiene factors are things that demotivate if not present, such as pay and good working conditions
• Reasons for companies wanting to motivate their workers:

  • To increase productivity
  • To improve job satisfaction
  • To reduce absenteeism
  • To decrease staff turnover