UB

• Business


  Any activity that provides goods and services to satisfy our needs and wants
• Goods


  Products that you can see or touch
• Types of goods


  • Durable goods
  • Non-durable goods
• Durable goods


  Goods that you can use until they eventually wear out or break down
• Non-durable goods


  Goods that can only be used once
• Services


  Things that are done for us
• Wealth


  Created by 'adding value' to something
• At each stage in the production of a good or the provision of a service, value is added to the price
• The business cycle


  1. Business produces goods and services

  2. Consumers have wants

  3. Consumers buy these goods and services

  4. Business sees these wants
• Reasons for starting a business

  • To satisfy peoples' needs and wants
  • To provide a service
  • To make a profit
  • To develop a good idea
  • Be your own boss
  • Develop a hobby
  • Redundancy – opportunity to change career
• Business plan


  A written description of your business's future, describing what you plan to do and how you plan to do it
• Who needs a business plan

  • Startups
  • Established businesses looking for finance
• Content of a business plan

  • Business description
  • Marketing – target markets, price, promotion, research
  • Competitors – names, strengths/weaknesses
  • Operations – suppliers names, customer, delivery method
  • Finance – cash budget, sales forecast, break even
• Sectors of business industry (activity)

  • Primary sector
  • Secondary sector
  • Tertiary sector
• Factors of production


  • Land
  • Labour
  • Capital
  • Enterprise
• Entrepreneur


  The person who brings together the workers, the natural and the man-made resources to produce goods and services
• Entrepreneurs are 'risk takers' – they can stand to lose everything if the idea doesn't work
• Customer service


  • Putting the customer first
  • Knowledgeable staff
  • Staff who enjoy their jobs and will be helpful
  • Good after sales service
  • Clear returns policy
• Good customer service


  • Customers who will come back to the organisation and recommend it to their friends
  • Increased sales and profits
  • Few complaints
  • Good reputation
• Implications of poor customer service

  • Customer will take their business elsewhere
  • The organisation will get a bad reputation
  • Loss of sales and profits
  • De-motivated staff
  • Bad reputation for organization
  • Difficult to attract new customers
  • Difficult to attract quality staff
• Methods used to measure customer service


  • Review customer complaints
  • Review sales/profit figures
  • Customer questionnaire (interview/email/telephone)
  • Staff focus group
  • Review ratings on website eg tripadvisor, own website
  • Review comments on social media
  • Mystery shopper
  • Suggestion boxes
• Sectors of economy


  • Private sector
  • Public sector
  • Third (Voluntary) sector
• Private sector


  Organisations owned by private individuals with the prime objective of making a profit
• Public sector


  Organisations owned by the taxpayer and controlled by local or central government
• Third (Voluntary) sector


  Organisations that are not for profit and non-governmental
• Types of business organisation - private sector

  • Sole trader
  • Partnership
  • Private limited company
• Sole trader


  A business that is owned and managed by one person
• Advantages of sole trader

  • It is easy and cheap to set up
  • Owner has complete control over all decisions
  • All profits are kept by the owner
• Disadvantages of sole trader

  • Owner is responsible for all debts
  • Limited access to finance
  • Workload can be very heavy
  • Lack of specialist skills
• Partnership


  A business owned by two or more people
• Advantages of partnership


  • More capital available
  • Shared workload and responsibilities
  • Wider range of skills and experience
• Disadvantages of partnership


  • Profits have to be shared
  • Disagreements may arise between partners
  • Unlimited liability for debts
• Private limited company


  A business owned by shareholders, with limited liability
• Advantages of private limited company

  • Limited liability
  • Easier to raise capital
  • Continuity of the business
• Disadvantages of private limited company

  • More regulations to follow
  • Profits have to be shared with shareholders
  • Accounts must be published
• Types of business organisation - voluntary (third) sector

  • Social enterprises
  • Charities
  • Voluntary organisations
• Types of business organisation - public sector

  • Local authorities
  • Central government
  • NHS
  • Police
  • Armed forces
• Sectors of economy - summary

  • Private sector
  • Public sector
  • Voluntary (third) sector
• Objectives of business organisations

  • Profit maximisation
  • Growth
  • Survival
  • Social responsibility
  • Customer satisfaction
• Short-term sources of finance

  • Bank overdraft
  • Trade credit
  • Hire purchase
  • Leasing