GCSE Business studies revision guide, Chapter 3

Enterprise and management

Entrepreneurs, the risk taker,are those who can think of a business idea an have enough confidence to try to make it work. Enterprise is the quality that Entrepreneurs show.

Why bother?

• Independence - the desire to work for themselves


• The pleasure comes along with success


• A higher income, as long as the business is working and making profit


• Using their own skills, knowledge or experience


• Needing new challenges to keep them on the ball

Business failure

• Not including all costs


• Taking on too much debt


• Not meeting customers' needs (lack of market research)


• Not having the right skills, knowledge or experience


• Being over-optimistic about sales


• Being unable to pay suppliers or other business debts

Why is management needed?

• organised and managed ---> people do not automatically do what they are supposed to do, or carry out jobs in the most efficient or effective manner.

Time management

• Having the self-discipline to know when jobs need to be done by, and to make sure that enough time is devoted to them.

Delegation and trust

• Responsibility needs to be delegated


• Trust people to get on with the job

Stakeholders

Stakeholders are people who have a stake in a business.

Internal stakeholders

People who have a direct interest in the business which they are employed by it/who own it. They rely on the business and their income.

• Owners

1. Sole trader


2. Partnerships/Cooperatives


3. Institutional owners/Holding companies


4. Government (public sector businesses)

• Shareholders ---> take the sare of the profits [Dividend]


• Employees


• Managers ---> The link between the employers and the employees

External stakeholders

People or other businesses that have a less direct stake in a business.

• Customers


• Suppliers


• Financial stakeholders


• Community


• Government


• Pressure groups

Conflicts

Sometimes stakeholder groups have conflicting aims.

E.g.

• Customers may want lower prices while shareholders want higher profits


• A business may want to expand operations while the community would like to keep it small.

Business aims and objectives

Aim is a long-term goal that businesses usually set to themselves. Objectives are usually more clearly defined than aims; they are the steps on the way to achieving an aim.

SMART targets

• S pecific - should be definite
• M easurable
• A chievable
• R ealistic and relevant
• T ime related - targets should be achieved within a set time period

Maximum aims versus minimum aims

Maximising aims involve making the most of something.

• Sales revenue


• market share


• Growth

Minimising aims involve making the least of something.

• Low employee turnover


• Low numbers of complaints


• the least possible impact on the environment

Small businesses

Small businesses often have less fat-reaching aims than large business. They are likely want to,

• Survive as a business


• Reach a breakeven point at which costs are covered

Satisficing aims, owners may have other aims they want to achieve; for instance, independence, a good reputation and loyal customers.

Business organisation

For any business to operate, it needs to have some structures to work it out.

Functions

• Finance


• Marketing and sale


• Administration


• Production


• Customers service and human resources


• Communitcation

Small businesses

In a small business it is unlikely that the functions will be divided into separate areas.

Larger businesses

They need a more formal organisation structure.

• Geography - where the barious parts of the business are located


• Product - what each part of the business makes


• Process - what each part of the business does in the chain of production

Organisation charts

The most common type is the 'family tree' chart, showing each 'family' of workers undera manager or director.

Each manager has a number of people under his/her control, it called span of control.

• Authority - the power that a manager has in a business


• Delegation - the right within the organisational set-up to make decision; sometimes this authority may be passed on.

Vertical organisations

Most organisations are hierarchical.

Hierarchical pyramid - people at the top have more authority than those at the bottom.

Horizontal organisations

There are few layers and many people in each layer, this kind of structure can make decision making hard.

Business size and growth

Businesses can grow internally by increasing market share/product range.

Measuring size

• Number of employees


• Value of assets


• Value on stock market (value of each share x no. of shares issued)


• Size of sales revenue


• Share of market

Small or large?

• Employees

1. Small - Fewer than 50
2. Medium - 50 - 249
3. Large - 250+

• Revenue

1. Small - Less than £2m
2. Medium - £2-8m
3. Large - £8m+

• Assets

1. Small - Less than £1m
2. Medium - £1-3m
3. Large - £3m+

SMEs

It stands for Small and Medium-sized Enterprises, a special groups of businesses that the fovernement tries to help.

A definition that includes micro businesses with fewer than 10 employees.

Growth

• Internal growth

When a business grows larger from within by increasing sales, using new tecnology...etc.

• External growth

When a business grows by joining with other businesses; either merger or takeover

Why stay small?

• It's already achieving its objectives without getting any bigger


• It's providing a local service - hair dressing, for instance


• It's supplying specialist products to small markets

Management style

The style that managers shoose to use will affect how efficiently the business operate and how well staff react to their decisions.

What is management?

• Strategic decisions - Top managers

Have an overview and decide on the general direction of a business

• Tactical decisions - Middle managers

Decide on intermediate targets and how they will be reached

• Operational decisions - Other managers

Involves the day-to-day running of a business

Motivation

Many businesses include representatives on management boards because employees work much better if the're motivated.

Management styles

• Autocratic


• Democratic


• Laissez-faire


• Bureaucratic

Communication

Clear communicatoin is vital to all businesses. Any communication consists of 5 parts,

• the sender


• the message


• the medium - the way the message is sent


• the receiver


• the feedback

Types of message

Communications may be internal or external.

• Internal ---> organisation


• External ---> with people or bodies outside the organisation

Businesses communicate with all their stakeholders.

Formal communications

• Reports


• Letters


• Memoranda


• Forms

Informal communications

This can take place at any time, using any medium.

The role of ICT

ICT stands for Information and Communications Technology. It is used for internal communication, within a business, and external communication, with other businesses and individuals.

Hardware

It refers to communications equipment.

• Laptops


• Destops


• Screens


• Projectors


• Servers


• Peripherals (Scanners, printers...etc.)

Software

It refers to the programmes run on computers.

• word processing


• spreadsheets


• databases


• publishing


• presentation


• control technology

Networks

Networks inernal to a business are called intranets. To ensure that everyone in a large organisation gets the same messages at the same time.

The biggest external network is the internet.

ICT and the customer

Provides the business with records of what customers have bought and can even update stock.

Problems

ICT still has some drawbacks:

• A computer is only as good as its operator. It known as GIGO (garbage in, garbage out)


• Losing the personal touch


• Speed of development


• Viruses can destroy records and attack software

Misuse of emails

Electronic media have made sending messages cheaper and more efficient, but there are still many drawbacks regarding privacy, security and firness for purpose.

*Next Im giving it to Robin*