Business unit 1 and motivation methods

• Business activity


  Businesses provide a wide range of goods and services
• Types of goods and services

  • Consumer goods
  • Producer goods
• Needs


  Basic requirements for human survival
• Wants


  People's desires for goods and services
• Purposes of business activity

  • Private enterprise
  • Social enterprise
  • Public enterprise
• Private enterprise


  Most businesses are owned privately by individuals or groups of individuals. They are private sector businesses.
• Private enterprise objective


  Maximise profit
• Social enterprise


  Some organisations are non-profit making. eg. Charities, pressure groups,clubs and societies exist for reasons other than profits
• Social enterprise objective


  Non-profit organisation
• Public enterprise


  Some goods and services are provided by organisations owned by the central or local government.
• Public enterprise objective


  Better standard of living
• Stakeholder


  An individual or group with an interest in the operation of a business
• Business stakeholders


  • Shareholders
  • Owners/Entrepreneurs
  • Customers
  • Employees
  • Managers
  • Financiers
  • Suppliers
  • Local community
  • Government
• Entrepreneur


  Person who takes risks and sets up businesses; individual who organises the other factors of production and risks their own money in a business venture.
• Shareholder


  Investor who invest money in business and get a share of profit called "dividend"
• Shareholder/Owner objective


  Profits, Dividend etc.
• Consumers


  People buy the goods and services that businesses sell. Consumers could be individuals or firms.
• Consumer objective


  Cheaper price, High quality products
• Employees

  Person who work in businesses
• Employee objective


  Salary, Training, Connection, Security etc.
• Managers

  People who help to run business. They are often employed to run the different departments in businesses such as marketing, production, finance and human resources.
• Manager objective


  Promotion, Salary
• Financiers


  Company / individual who lend money to the business.
• Financier objective


  Interest / firms able to repay debt
• Suppliers


  Businesses that provide raw materials, parts, commercial services and utilities, such as electricity and water, to other businesses
• Supplier objective


  Sales revenue, Good relationship, Prompt payment and regular orders
• Local community

  Most businesses are likely to have an impact on the local community. There may be more jobs, more overtime and possibly higher pay.
• Government


  Taxes from businesses and their employees are used to finance government spending.
• Business environment


  External factors that are likely to change overtime such as strength of competition, the economic climate, government legislation, population trends, demand patterns, world affairs and social factors.
• Importance of clear business objectives

  • Employees need something to work towards. Objectives help to motivate people.
  • Without objectives owners might not have the motivation needed to keep business going.
  • Objectives help to decide where to take a business and what steps are necessary to get there.
  • It is easier to assess the performance of a business if objectives are set. If objectives are achieved it could be argued that the business has performed well.
• Financial business objectives


  • Survival
  • Profit
  • Sales
  • Increase market share
  • Financial security
• Survival

  At the beginning, owners face with high competition, lack experience and may be a shortage of resources.
• Profit

  Most businesses aim to make a profit because their owners want a financial return. Shareholders would like to gain large dividends.
• Sales


  Businesses with large volumes of sales may enjoy a number of benefits
• Increase market share


  Businesses often want to build a large market share. Able to dominate the market ; as a result ; it is possible to charge higher prices. Large market share also has a higher profile in the market. As a result, it is easier to launch new products
• Financial security

  Some businesses might aim to make enough profit to give them financial security. This is sometimes called " Profit satisficing"
• Non-financial business objectives


  • Social objective
  • Personal satisfaction
  • Challenge
  • Independence and control
• Social objective


  In the public sector, the government owns businesses which are concerned with social objectives. Aims of government: Social objectives are designed to improve human-being. eg. National Defence
• Personal satisfaction


  Some owners have developed their hobby into a business.
• Challenge


  Some people are motivated by challenges and starting a business can be very challenging.