What is a business?
An organization or economic system where goods and services are exchanged for one another or for money.
Every business requires some form of investment and enough customers to whom its output can be sold on a consistent basis in order to make a profit.
Businesses can be privately owned, not-for-profit or state-owned. An example of a corporate business is PepsiCo, while a mom-and-pop catering business is a private enterprise.
Every business requires some form of investment and enough customers to whom its output can be sold on a consistent basis in order to make a profit.
Businesses can be privately owned, not-for-profit or state-owned. An example of a corporate business is PepsiCo, while a mom-and-pop catering business is a private enterprise.
Who is a consumer?
We are all consumers because we demand goods and services to satisfy our needs and wants
Consumers: People, Businesses and Government Organizations
Consumption involves using up goods and services to satisfy our needs and wants
Consumers: People, Businesses and Government Organizations
Consumption involves using up goods and services to satisfy our needs and wants
Brainstorm
-Which picture shows someone consuming a good or service?
-Which picture shows someone producing a good or service?
-Which picture shows items you need for survival and which shows items you simply want to enjoy?
-Which picture shows someone producing a good or service?
-Which picture shows items you need for survival and which shows items you simply want to enjoy?
What is production?
Production is a process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (the output). It is the act of creating output, a good or service which has value and contributes to the utility of individuals.
Economic well-being is created in a production process, meaning all economic activities that aim directly or indirectly to satisfy human wants and needs. The degree to which the needs are satisfied is often accepted as a measure of economic well-being. In production there are two features which explain increasing economic well-being. They are improving quality-price-ratio of goods and services and increasing incomes from growing and more efficient market production.
Economic well-being is created in a production process, meaning all economic activities that aim directly or indirectly to satisfy human wants and needs. The degree to which the needs are satisfied is often accepted as a measure of economic well-being. In production there are two features which explain increasing economic well-being. They are improving quality-price-ratio of goods and services and increasing incomes from growing and more efficient market production.
What is a business enterprise?
Business enterprise or firm is an organization involved in productive activity
There are 2 types of Business Enterprise
•Private enterprise
•Public enterprise
•Private enterprise
•Public enterprise
Understanding Specialization
Our ancestors had to be self sufficient. They used to do their own...
–Growing and hunting food
–Make own tools
–Build own shelters
–Weaving cotton and wool
–Producing cooking pots etc
–Growing and hunting food
–Make own tools
–Build own shelters
–Weaving cotton and wool
–Producing cooking pots etc
Not to long ago people began to realize
–It is difficult to try so many things at the same time
–People have different skills and abilities and access to different resources
–It was far better therefore to concentrate on production activities they were best able to perform
Therefore,
–People and communities began to specialize in different productive activity
–It is difficult to try so many things at the same time
–People have different skills and abilities and access to different resources
–It was far better therefore to concentrate on production activities they were best able to perform
Therefore,
–People and communities began to specialize in different productive activity
Benefits of Specialization
- We now exchange goods and services for money which had made trade much easier
- Specialized machinery and equipment has been developed
- Automated production using computer controlled machinery and robots
- People have developed specialized skills
- International specialization and trade
Division of Labour
People have different skills, so different people are best suited to do different jobs. Employees work on tasks that best suit their skills
Question
Classification of businesses
Classification by Industry
A group of firms specializing in the production or sale of the same or very similar goods and services or using very similar production process.
Ex: Automotive Industry:
–All firms making and supplying vehicles and engines, tyres, body parts and components
Ex: Air Transport Industry
–All firms providing air passenger and airfreight transport services and facilities, including airport and airlines
Classification by how they are owned
-Public Sector and Private Sector
A group of firms specializing in the production or sale of the same or very similar goods and services or using very similar production process.
Ex: Automotive Industry:
–All firms making and supplying vehicles and engines, tyres, body parts and components
Ex: Air Transport Industry
–All firms providing air passenger and airfreight transport services and facilities, including airport and airlines
Classification by how they are owned
-Public Sector and Private Sector
The Three Sectors
Primary Sector
The primary sector includes all those activities the end purpose of which consists in exploiting natural resources: agriculture, fishing, forestry, mining, deposits. It is the first stage of production for any good or services
The primary sector includes all those activities the end purpose of which consists in exploiting natural resources: agriculture, fishing, forestry, mining, deposits. It is the first stage of production for any good or services
Secondary Sector
The secondary sector of the economy includes industries that produce a finished, usable product or are involved in construction.
This sector generally takes the output of the primary sector and manufactures finished goods or where they are suitable for used by other businesses, for export, or sale to domestic consumers.
The secondary sector of the economy includes industries that produce a finished, usable product or are involved in construction.
This sector generally takes the output of the primary sector and manufactures finished goods or where they are suitable for used by other businesses, for export, or sale to domestic consumers.
Tertiary Sector
The tertiary sector or service sector is the third of the three economic sectors of the three-sector theory. The others are the secondary sector (approximately the same as manufacturing), and the primary sector (raw materials).
The service sector consists of the production of services instead of end products
Activity: The three sectors
Mix of industrial sector in different economies
Every economy has a varying mix of primary, secondary and tertiary sector of industries
Developed economy is an economy with large secondary and tertiary sector
Developed economy is an economy with large tertiary sector
Underdeveloped economy is an economy with a very large primary sector
Lets understand this from the below table:
Developed economy is an economy with large secondary and tertiary sector
Developed economy is an economy with large tertiary sector
Underdeveloped economy is an economy with a very large primary sector
Lets understand this from the below table:
Activity
Market Economy and Mixed Economy
What is a market?
A market is where a seller and a consumer come together to perform business activity
Ex: Different types of markets
Ex: Different types of markets
The level of government intervention determines the type of economy
Private sector Vs Public Sector
Private Sector
rThe private sector is usually composed of organizations that are privately owned and not part of the government. These usually includes corporations (both profit and non-profit) and partnerships. An easier way to think of the private sector is by thinking of organizations that are not owned or operated by the government. For example, retail stores, credit unions, and local businesses will operate in the private sector.
Public Sector
The public sector is usually composed of organizations that are owned and operated by the government. This includes federal, provincial, state, or municipal governments, depending on where you live. Privacy legislation usually calls organizations in the public sector a public body or a public authority.
Some examples of public bodies in Canada and the United Kingdom are educational bodies, health care bodies, police and prison services, and local and central government bodies and their departments.
Video Comparison
rThe private sector is usually composed of organizations that are privately owned and not part of the government. These usually includes corporations (both profit and non-profit) and partnerships. An easier way to think of the private sector is by thinking of organizations that are not owned or operated by the government. For example, retail stores, credit unions, and local businesses will operate in the private sector.
Public Sector
The public sector is usually composed of organizations that are owned and operated by the government. This includes federal, provincial, state, or municipal governments, depending on where you live. Privacy legislation usually calls organizations in the public sector a public body or a public authority.
Some examples of public bodies in Canada and the United Kingdom are educational bodies, health care bodies, police and prison services, and local and central government bodies and their departments.
Video Comparison
Comparison
Privatization vs nationalization
Privatization and nationalization are two words that have opposite meanings, which makes them antonyms.
Privatization is the process by which a government-owned business or a publicly-owned business is transferred into private ownership. The idea may be that privatization leads to a more efficient institution, or privatization may occur simply as a bribe or reward to supporters of a regime. The word privatization came into use in the 1940s to describe the movement in Nazi Germany to return industry to the hands of private individuals.
Nationalization is the process by which privately owned business is transferred into government or public ownership. The idea may be that the business is so important to the well-being of the public that it can not be trusted to private individuals, or it may be that the government is over-reaching.
Examples
1. They also called for a review of the privatisation process that led to the takeover in November 2013 of the electricity generation and distribution companies created from the defunct Power Holding Company of Nigeria. (Punch)
2. The privatisation of the British military’s fire and rescue services has been suspended after the outsourcer Serco challenged the Ministry of Defence’s decision to award the contract to its rival Capita. (The Financial Times)
3. Indonesia’s nationalization of a major copper and gold mine formerly run by U.S. metals company Freeport-McMoRan is a win for Indonesian President Joko Widodo who has been calling for the reclamation of strategic resources. (The Nikkei Asian Review)
4. The All India Bank Officers’ Confederation (AIBOC) congratulates each one of the public sector banker for the 50 glorious years of bank nationalization observed on Thursday and gratefully acknowledge the contributions made by each of the citizens of the country in the eventful journey. (The Sentinel)
Privatization is the process by which a government-owned business or a publicly-owned business is transferred into private ownership. The idea may be that privatization leads to a more efficient institution, or privatization may occur simply as a bribe or reward to supporters of a regime. The word privatization came into use in the 1940s to describe the movement in Nazi Germany to return industry to the hands of private individuals.
Nationalization is the process by which privately owned business is transferred into government or public ownership. The idea may be that the business is so important to the well-being of the public that it can not be trusted to private individuals, or it may be that the government is over-reaching.
Examples
1. They also called for a review of the privatisation process that led to the takeover in November 2013 of the electricity generation and distribution companies created from the defunct Power Holding Company of Nigeria. (Punch)
2. The privatisation of the British military’s fire and rescue services has been suspended after the outsourcer Serco challenged the Ministry of Defence’s decision to award the contract to its rival Capita. (The Financial Times)
3. Indonesia’s nationalization of a major copper and gold mine formerly run by U.S. metals company Freeport-McMoRan is a win for Indonesian President Joko Widodo who has been calling for the reclamation of strategic resources. (The Nikkei Asian Review)
4. The All India Bank Officers’ Confederation (AIBOC) congratulates each one of the public sector banker for the 50 glorious years of bank nationalization observed on Thursday and gratefully acknowledge the contributions made by each of the citizens of the country in the eventful journey. (The Sentinel)
Entrepreneur
An entrepreneur is someone who sets up and runs their own business.
Some of the characteristics of an entrepreneur are...
Some of the characteristics of an entrepreneur are...
Examples: Some successful entrepreneurs…
Advantages and disadvantages of being an entrepreneur
Why government support entrepreneur/business startup?
The business Plan
Business plan is a written statement about business proposal
–How a business will be organized
–What they want to achieve
–How they will do so
–Timeline
–Aim and Vision (Targets and Goals)
–Finances
A business plan
-keeps a business on track
-is helpful for the stakeholders (Suppliers, customers, employees)
-helps an entrepreneur to turn an idea into profit making business
A typical business plan will have…
1. Business Summary
2. Business Detail
3. Market Research
4. Marketing plan
5. Day to day running of business
6. Finance
–How a business will be organized
–What they want to achieve
–How they will do so
–Timeline
–Aim and Vision (Targets and Goals)
–Finances
A business plan
-keeps a business on track
-is helpful for the stakeholders (Suppliers, customers, employees)
-helps an entrepreneur to turn an idea into profit making business
A typical business plan will have…
1. Business Summary
2. Business Detail
3. Market Research
4. Marketing plan
5. Day to day running of business
6. Finance
Measuring business size
A business can be measured in a number of ways. Choosing the correct method is a difficult task. No measure can be used on it own – it depends on what you are trying to measure
In the world around us there are some businesses which are small and some are big. But how do we categorize these businesses as big or small. We can consider the following factors:
Note 1: Profit is not a measure of size, it only shows a monetary value.
Ex: business can be very large and only produce small amount of profit
Note 2: The best way to measure the size of a business is to use all the measures described
Ex: Combining the number of number of employees and market share gives more accurate idea about the size
Activity
In the world around us there are some businesses which are small and some are big. But how do we categorize these businesses as big or small. We can consider the following factors:
- The number of employees: but business which use more machinery and technology i.e. capital intensive may have few employees but they still might be big. Example Microsoft has less employees but still it the biggest business on earth.
- The amount of capital invested: A business which might not use a lot of investment in machinery but and involves less investment may still be big. Take the example of software companies and consultancy firms like McKenzie & Co.
- The sales turnover: A business may be going through a bad phase and may not have huge sales does it make the business small?
- Market capitalisation: markets are very volatile and share prices change every day does it alter the size of the business every day?
- Market share: a business may not be a market leader but still may be huge whereas if the market is itself very small, a major market share won’t make a business big.
Note 1: Profit is not a measure of size, it only shows a monetary value.
Ex: business can be very large and only produce small amount of profit
Note 2: The best way to measure the size of a business is to use all the measures described
Ex: Combining the number of number of employees and market share gives more accurate idea about the size
Activity
Why owners want to grow their business
Imagine you run a small beauty salon. It is producing a profit each year and is well established in the local area. Would you try to grow the business?
Yes, because the business growth brings with it the following benefits:
Yes, because the business growth brings with it the following benefits:
Different ways in which businesses can grow
Businesses can grow organically (internally) or externally through a process of merger / acquisition
Organic growth is also known as internal growth.
It happens when a business expands its own operations rather than relying on takeovers and mergers.
Organic growth can come about from:
External Growth of a Business
There are many potential advantages:
It happens when a business expands its own operations rather than relying on takeovers and mergers.
Organic growth can come about from:
- Increasing existing production capacity through investment in new capital & technology
- Development & launch of new products
- Finding new markets for example by exporting into emerging countries
- Growing a customer base through marketing
External Growth of a Business
There are many potential advantages:
- Faster speed of access to new product or market areas
- Increased market share / increased market power
- Access internal economies of scale (perhaps by combining production capacity)
- Secure better distribution channels / control of supplies
- Acquire intangible assets (brands, patents, trademarks)
- Overcome barriers to entry to target new markets
- Defend a business against a takeover threat
- Enter new segments of an existing market
- To take advantage of deregulation in an industry / market
Problems of business Growth and how to overcome them
The four major problems of business growth can be summarized as below:
Ways to overcome business problems:
Activity
Why some businesses fail
Despite all the hard work, capital and expertise, some businesses do fail. This can happen to businesses of all size.
Lets check the below statistics:
Lets check the below statistics:
1. Liquidity Problem
•Businesses need to be able to run day-to-day
•Regular cash inflows are crucial for a businesses to pay daily costs
–Employees salary, electricity, suppliers, running office or shop costs etc.
•These costs are often hard to estimate accurately
•Without proper monitoring there is a possibility of over spending
•Ex South African business, 1time Airline, filed for liquidation (arrange for closure), because it didn’t monitor its expenditure closely enough and saw its cash flow drop
2. Initial Error
•Many startups make mistakes early on, which can cause failure
–For ex choosing the wrong product
•These mistakes can often be hard to solve,
–especially when the business had spent its startup cash
•Even existing businesses make error later on
3. Lack of management skills
•Businesses, no matter how big or old, can fail because of the poor decisions of managers
•Managers make the most important decisions,
–They can choose the wrong product, pricing method or market to sell etc
•Ex: An American company , FirstEnergy, was criticized because its managers responded slowly to power failure during Hurricane Sandy in 2012
–This can have a damaging effect on a business, potentially causing closure
4. No reputation
•Establishing a reputation can be hard for a business.
•If a market has well-known brands, start-up businesses fail.
•Ex: with AirAsia and Malaysian Airlines dominating the Malaysian air travel market, a startup business may struggle
•*Yet even businesses that have a strong reputation can lose business very quickly by making error
5. The market conditions
•Some markets can be harder to enter than others
–Ex banking market
•The business environment can cause problem for a business.
–Ex Recession: People spend less money so businesses many lose orders and income
•During recession in 2008-09
–Banking market was targeted as one that needed to reduce its barrier in order to allow more business to enter and succeed
6. The economy
•Recession Vs Boom
•Recession is an unfavorable market economy
–Many businesses of all size fail
–Due to lack of customer spending, which cause a reduction in a business’s revenue
•Changes in government regulations
–The policies on taxation
–Business support and trade deals
7. Large competitor
•As other businesses grow, smaller businesses can often be squeezed out of the market.
•This is because larger businesses can afford to invest in
–developing new products,
–reducing their price or
–using larger advertising campaigns.
Why are new businesses more likely to fail ?
•They do not have reputation
•They do not have (brand) loyal customers to support them
–Ex apple has created an ‘i’ brand by placing this before its product names; for ex: iPhone, iPad, and iPod
•They struggle to compete with large, more established competitors
•Large businesses can spend millions of dollars on advertising where as smaller startups may only have a few hundred dollars to spend
•Businesses need to be able to run day-to-day
•Regular cash inflows are crucial for a businesses to pay daily costs
–Employees salary, electricity, suppliers, running office or shop costs etc.
•These costs are often hard to estimate accurately
•Without proper monitoring there is a possibility of over spending
•Ex South African business, 1time Airline, filed for liquidation (arrange for closure), because it didn’t monitor its expenditure closely enough and saw its cash flow drop
2. Initial Error
•Many startups make mistakes early on, which can cause failure
–For ex choosing the wrong product
•These mistakes can often be hard to solve,
–especially when the business had spent its startup cash
•Even existing businesses make error later on
3. Lack of management skills
•Businesses, no matter how big or old, can fail because of the poor decisions of managers
•Managers make the most important decisions,
–They can choose the wrong product, pricing method or market to sell etc
•Ex: An American company , FirstEnergy, was criticized because its managers responded slowly to power failure during Hurricane Sandy in 2012
–This can have a damaging effect on a business, potentially causing closure
4. No reputation
•Establishing a reputation can be hard for a business.
•If a market has well-known brands, start-up businesses fail.
•Ex: with AirAsia and Malaysian Airlines dominating the Malaysian air travel market, a startup business may struggle
•*Yet even businesses that have a strong reputation can lose business very quickly by making error
5. The market conditions
•Some markets can be harder to enter than others
–Ex banking market
•The business environment can cause problem for a business.
–Ex Recession: People spend less money so businesses many lose orders and income
•During recession in 2008-09
–Banking market was targeted as one that needed to reduce its barrier in order to allow more business to enter and succeed
6. The economy
•Recession Vs Boom
•Recession is an unfavorable market economy
–Many businesses of all size fail
–Due to lack of customer spending, which cause a reduction in a business’s revenue
•Changes in government regulations
–The policies on taxation
–Business support and trade deals
7. Large competitor
•As other businesses grow, smaller businesses can often be squeezed out of the market.
•This is because larger businesses can afford to invest in
–developing new products,
–reducing their price or
–using larger advertising campaigns.
Why are new businesses more likely to fail ?
•They do not have reputation
•They do not have (brand) loyal customers to support them
–Ex apple has created an ‘i’ brand by placing this before its product names; for ex: iPhone, iPad, and iPod
•They struggle to compete with large, more established competitors
•Large businesses can spend millions of dollars on advertising where as smaller startups may only have a few hundred dollars to spend
Types of business organization
Private sector business can be classified as above.
Unincorporated business: Unincorporated businesses are not legally registered as companies.
Lets understand the two types of unincorporated businesses.
1. Sole Trader
A sole trader describes any business that is owned and controlled by one person - although they may employ workers. Individuals who provide a specialist service like plumbers, hairdressers or photographers are often sole traders.
Unincorporated business: Unincorporated businesses are not legally registered as companies.
Lets understand the two types of unincorporated businesses.
1. Sole Trader
A sole trader describes any business that is owned and controlled by one person - although they may employ workers. Individuals who provide a specialist service like plumbers, hairdressers or photographers are often sole traders.
Sole traders do not have a separate legal existence from the business. In the eyes of the law, the business and the owner are the same. As a result, the owner is personally liable for the firm's debts and may have to pay for losses made by the business out of their own pocket. This is called unlimited liability.
Advantages
2. Partnerships
Partnerships are businesses owned by two or more people.
Partnerships are businesses owned by two or more people.
Doctors, dentists and solicitors are typical examples of professionals who may go into partnership together and can benefit from shared expertise. One advantage of partnership is that there is someone to consult on business decisions.
The main disadvantage of a partnership comes from shared responsibility. Disputes can arise over decisions that have to be made, or about the effort one partner is putting into the firm compared with another. Like a sole trader, partners (who have not registered as an LLP) have unlimited liability.
Incorporated business:
A limited company has special status in the eyes of the law. These types of company are incorporated, which means they have their own legal identity and can sue or own assets in their own right. The ownership of a limited company is divided up into equal parts called shares. Whoever owns one or more of these is called a shareholder.
Because limited companies have their own legal identity, their owners are not personally liable for the firm's debts. The shareholders have limited liability, which is the major advantage of this type of business legal structure
Unlike a sole trader or a partnership, the owners of a limited company are not necessarily involved in running the business, unless they have been elected to the Board of Directors.
There are two main types of limited company:
Advantages
- Easy to set up
- Small capital investment means reduced start-up costs
- Freedom to make decisions
- Responsibility
- Long hours
- Unlimited liability
2. Partnerships
Partnerships are businesses owned by two or more people.
Partnerships are businesses owned by two or more people.
Doctors, dentists and solicitors are typical examples of professionals who may go into partnership together and can benefit from shared expertise. One advantage of partnership is that there is someone to consult on business decisions.
The main disadvantage of a partnership comes from shared responsibility. Disputes can arise over decisions that have to be made, or about the effort one partner is putting into the firm compared with another. Like a sole trader, partners (who have not registered as an LLP) have unlimited liability.
Incorporated business:
A limited company has special status in the eyes of the law. These types of company are incorporated, which means they have their own legal identity and can sue or own assets in their own right. The ownership of a limited company is divided up into equal parts called shares. Whoever owns one or more of these is called a shareholder.
Because limited companies have their own legal identity, their owners are not personally liable for the firm's debts. The shareholders have limited liability, which is the major advantage of this type of business legal structure
Unlike a sole trader or a partnership, the owners of a limited company are not necessarily involved in running the business, unless they have been elected to the Board of Directors.
There are two main types of limited company:
- a private limited company (ltd): Sells shares privately to the existing shareholders
- a public limited company (plc): Sells its shares publicly through a stock exchange
Other forms of businesses
1.Franchise
Involves an agreement by one company to another business organization to permit the distribution of its goods or services using its trademark or brand name
ØThe franchisor in an existing, usually well known company with an established identity, market and brand name for its product
ØThe franchisee is a sole trader, partnership or limited company that buys the right to use the business name, brand name, production methods and promotional material of the franchisor
Example: McDonald’s
•Its one of the largest and most well-known franchising company in the world
•Has more than 35000 fast food restaurants worldwide in over 100 countries
•Around 75% o the businesses are owned and operated by independent local business owners
–They have the right to advertise, produce and sell McDonald’s food products
•The new owner pays upto around $45000 for a franchise depending on the location, and then pays a monthly service fee and a percentage of its sales to Mcdonald’s
•In return McDonald’s provides owner and staff training, restaurant equipment, supplies, promotional materials and if possible help with finding suitable premises
•It also monitors the performance of the restaurant
–It is very important for McDonald’s that each restaurant provides good quality food and service
•Franchising has allowed McDonald’s to achieve rapid global growth in its brand and sales
Involves an agreement by one company to another business organization to permit the distribution of its goods or services using its trademark or brand name
ØThe franchisor in an existing, usually well known company with an established identity, market and brand name for its product
ØThe franchisee is a sole trader, partnership or limited company that buys the right to use the business name, brand name, production methods and promotional material of the franchisor
Example: McDonald’s
•Its one of the largest and most well-known franchising company in the world
•Has more than 35000 fast food restaurants worldwide in over 100 countries
•Around 75% o the businesses are owned and operated by independent local business owners
–They have the right to advertise, produce and sell McDonald’s food products
•The new owner pays upto around $45000 for a franchise depending on the location, and then pays a monthly service fee and a percentage of its sales to Mcdonald’s
•In return McDonald’s provides owner and staff training, restaurant equipment, supplies, promotional materials and if possible help with finding suitable premises
•It also monitors the performance of the restaurant
–It is very important for McDonald’s that each restaurant provides good quality food and service
•Franchising has allowed McDonald’s to achieve rapid global growth in its brand and sales
2. Joint Venture
It is a contractual agreement between two or more organizations to share expertize, investment, management, costs, profits and risks of running a new business projects
Organizations enter joint venture to with other experienced organizations :
–To expand into new markets overseas
–To develop new advanced products and technologies
Examples
1.BP Plc and General Electric Inc formed a joint venture in 2006 to develop new hydrogen power project to reduce greenhouse gas emission from electricity generation
2.Sikorsky Aircrafy corporation and Tata Advanced systems Ltdcreated a joint venture in 2009 to manufacture aerospace components for Sikorsky in India
>Neither of these companies had sufficient finance or expertise to undertake these projects alone
3. Public sector enterprises
The public sector includes all organizations owned and controlled by national, state or local government authorities
Some public sector organizations are public corporations. Their objective is to:
–Carry out particular government function, such as central bank or public broadcasting corporation
–Provide essential public services, such as public hospital or public sanitation
–Carryout commercial activities on behalf of the government, such as a state owned rail company or airlines
Choosing the right kind of ownership
It is a contractual agreement between two or more organizations to share expertize, investment, management, costs, profits and risks of running a new business projects
Organizations enter joint venture to with other experienced organizations :
–To expand into new markets overseas
–To develop new advanced products and technologies
Examples
1.BP Plc and General Electric Inc formed a joint venture in 2006 to develop new hydrogen power project to reduce greenhouse gas emission from electricity generation
2.Sikorsky Aircrafy corporation and Tata Advanced systems Ltdcreated a joint venture in 2009 to manufacture aerospace components for Sikorsky in India
>Neither of these companies had sufficient finance or expertise to undertake these projects alone
3. Public sector enterprises
The public sector includes all organizations owned and controlled by national, state or local government authorities
Some public sector organizations are public corporations. Their objective is to:
–Carry out particular government function, such as central bank or public broadcasting corporation
–Provide essential public services, such as public hospital or public sanitation
–Carryout commercial activities on behalf of the government, such as a state owned rail company or airlines
Choosing the right kind of ownership
Business objectives
Business Objectives..
•Give employee a sense of direction and a target against which they can be judged
•Important for different stakeholders to use as a means of judgment
•Help business owners to judge if the workforce have done what they should do
•Identify where any problem are within the business
Many businesses publish mission statements which summarize their main aim and objective:
•Give employee a sense of direction and a target against which they can be judged
•Important for different stakeholders to use as a means of judgment
•Help business owners to judge if the workforce have done what they should do
•Identify where any problem are within the business
Many businesses publish mission statements which summarize their main aim and objective:
Activity
SMART approach to set business objectives
Activity
Objectives may change over time
•Starting and running a business is difficult
•Customer taste and spending pattern change
•Competition from large businesses can be fierce
•Start-ups with new ideas bring new kind of competition to large businesses
•Competition can come from overseas
•New technology changes production process and product design/quality
ØProduction, sales and profit targets need to change as a result
•Customer taste and spending pattern change
•Competition from large businesses can be fierce
•Start-ups with new ideas bring new kind of competition to large businesses
•Competition can come from overseas
•New technology changes production process and product design/quality
ØProduction, sales and profit targets need to change as a result
Stakeholders
A stakeholder is a person or group who has an interest in the business
Internal Stakeholder:
Internal Stakeholder:
External Stakeholders:
Stakeholders Objectives
People in Business
Motivating Employees
Motivation is the desire to achieve a certain result or outcome.
It is a characteristic that helps you achieve your goal. It is the drive that pushes you to work hard.
People in the workplace have differing views on the sources of motivation
•Motivation can be the will to work due to enjoyment of the work itself. This implies that motivation comes from within an individual employee.
•The will or desire to achieve a given target or goal that is the result of external factors such as the promise of reward, or to avoid threat of punishment
It is a characteristic that helps you achieve your goal. It is the drive that pushes you to work hard.
People in the workplace have differing views on the sources of motivation
•Motivation can be the will to work due to enjoyment of the work itself. This implies that motivation comes from within an individual employee.
•The will or desire to achieve a given target or goal that is the result of external factors such as the promise of reward, or to avoid threat of punishment
Maslow’s Hierarchy of Needs
•Abraham Maslow have the theory of what motivates human beings.
•He was an American Psychologist
•Maslow suggested that all human beings have similar needs and that these needs have an order of priority. He called this theory the “Hierarchy of Needs”
Hierarchy of needs: is a theory of that employees have successive requirements that can be fulfilled through work
Frederick Taylor Theory of Motivation
•Taylor believed that managers could identify the best way to complete the a job through a scientific procedure of observation, experiment and calculation.
•He was an American engineer. •Developed the idea of division of labor; to improve efficiency and improve competitiveness. • known as the father of scientific management. •He believed that people were motivated solely by money- ‘rational man’ •He believed people can be treated in a standardized way like machines. |