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AN INTRODUCTION TO AN INTRODUCTION TO BUSINESSBUSINESS

UNIT 1UNIT 1

PPT 2PPT 2

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Businesses Exist ...Businesses Exist ...

To develop a good idea To develop a good idea To make a profitTo make a profitFor charitable reasonsFor charitable reasonsTo provide a public serviceTo provide a public service

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TO DEVELOP A GOOD IDEATO DEVELOP A GOOD IDEA

Inventors create new productsInventors create new productsAn idea for a product/service that no-one An idea for a product/service that no-one

else has brought to marketelse has brought to market

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TO MAKE A PROFIT ...TO MAKE A PROFIT ...

By selling something at a price which is By selling something at a price which is higher than it cost to providehigher than it cost to provide

Profit is the Profit is the return on investmentreturn on investment made by made by the owner or owners. If there is no profit, the owner or owners. If there is no profit, they may sell up and invest elsewherethey may sell up and invest elsewhere

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FOR CHARITABLE REASONS ...FOR CHARITABLE REASONS ...

Volunteers work to support and help Volunteers work to support and help othersothers

Funds are raised in a number of ways - Funds are raised in a number of ways - coffee mornings, concerts ...coffee mornings, concerts ...

Red Nose Day for Comic ReliefRed Nose Day for Comic ReliefCompany SponsorshipCompany SponsorshipCollection tinsCollection tinsSetting up “Charity Shop” to sell itemsSetting up “Charity Shop” to sell itemsPublic Donations - wills, gifts etcPublic Donations - wills, gifts etc

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TO PROVIDE A PUBLIC SERVICETO PROVIDE A PUBLIC SERVICE

Services provided by the Government and Services provided by the Government and paid for by our taxespaid for by our taxes

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Public Services include ...Public Services include ...

National Health Service/hospitalsNational Health Service/hospitalsSchoolsSchoolsRoadsRoadsLibrariesLibrariesEducationEducationArmed ServicesArmed ServicesPolice/Fire ServicesPolice/Fire Services

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WHAT ARE THE AIMS OF WHAT ARE THE AIMS OF BUSINESSES?BUSINESSES?

Most profit-seeking Most profit-seeking businesses aim to achieve businesses aim to achieve somesome of the following of the following

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BUSINESS AIMSBUSINESS AIMS

Quality Product/Service

Increase Market Share

Survival Maximise Profit

Growth

Excellent Customer Service

Environmentally Friendly

New Branches

Foreign Trademore customers, more customers, beating the competitionbeating the competition

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Not all businesses focus solely on Not all businesses focus solely on making profits. making profits.

Body ShopBody Shop and and The Co-opThe Co-op are are examples of organisations which examples of organisations which have much wider aims.have much wider aims.

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Improving conditions of:Improving conditions of:

The workforceThe workforce many firms provide a variety of “extras” or perks for their many firms provide a variety of “extras” or perks for their employees egemployees eg

cheap food, social clubs/sports facilities, cheap food, social clubs/sports facilities, hairdressing and manicures, flexible hourshairdressing and manicures, flexible hours

The suppliersThe suppliersespecially those in Third World Countries who are often especially those in Third World Countries who are often

very badly paidvery badly paid People in the communityPeople in the community many businesses set aside money to give to charities, many businesses set aside money to give to charities, especially local onesespecially local ones

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Help more peopleHelp more peopleCollect as much money as possibleCollect as much money as possibleRecruit more people to helpRecruit more people to helpOpen more charity shopsOpen more charity shops

A Charity might also have different aims ...

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Providing a quality serviceProviding a quality serviceProviding an efficient service - eg hospital Providing an efficient service - eg hospital

appointments within a certain timeappointments within a certain timeCutting costsCutting costsRaising revenue - persuading the Raising revenue - persuading the

Government to allocate more fundsGovernment to allocate more funds

Public Sector organisations might also have different aims ...

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Who has an Who has an interestinterest in the in the business?business?

Many people can have an interest in Many people can have an interest in how a business is run and managed how a business is run and managed and how it performs...and how it performs...

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These people are called…These people are called…

StakeholdersStakeholders

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Stakeholders of a large Stakeholders of a large companycompany

Suppliers

Employees

ShareholdersDirectors/Managers

HM Revenue and Customs

Customers

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Stakeholders include …Stakeholders include …

OwnersOwners

owner/managers of small businesses owner/managers of small businesses shareholders of larger companiesshareholders of larger companies will share in profits if business does well will share in profits if business does well

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Directors/Managers Directors/Managers

If the business doesn’t do well, they could If the business doesn’t do well, they could be out of a job!be out of a job!

If business does well could receive a If business does well could receive a bonusbonus

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Employees Employees

As with managers, if the business does As with managers, if the business does badly, they might lose their jobsbadly, they might lose their jobs

Want to have job security Want to have job security May not be enough money to pay their May not be enough money to pay their

wageswagesMay not receive pay increase if poor May not receive pay increase if poor

performanceperformance

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HM Revenue and CustomsHM Revenue and Customs

They have to make sure they collect the They have to make sure they collect the appropriate taxesappropriate taxes

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GovernmentGovernment

Provides employment, saves paying Provides employment, saves paying benefitsbenefits

Creates wealth in the EconomyCreates wealth in the Economy

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SuppliersSuppliers

To feel secure that they have a customer To feel secure that they have a customer to sell toto sell to

Want to ensure they receive paymentWant to ensure they receive payment

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CustomersCustomers

want to buy good quality products at a want to buy good quality products at a reasonable pricereasonable price

like variety of goods/choicelike variety of goods/choice

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Local CommunityLocal Community

Want to ensure work is carried out safelyWant to ensure work is carried out safelyCreates employment in the community Creates employment in the community

leading to increased wealthleading to increased wealth

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Pressure GroupsPressure Groups

Environmental groups want to ensure no Environmental groups want to ensure no work is causing pollution/damage to work is causing pollution/damage to environmentenvironment

Workers rights are maintainedWorkers rights are maintained

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Banks/InvestorsBanks/Investors

Want business to be successful to ensure Want business to be successful to ensure any loans will be repaidany loans will be repaid

To receive return on their investmentTo receive return on their investment

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Social Costs and BenefitsSocial Costs and Benefits

Social CostsSocial Costs Traffic congestionTraffic congestion Traffic pollution – poor air Traffic pollution – poor air

qualityquality Noise pollution Noise pollution Health problemsHealth problems

These are negative These are negative effects on a communityeffects on a communityas a result of a new as a result of a new business.business.

Social BenefitsSocial Benefits Improved roadImproved road

networknetwork New housingNew housing New schoolsNew schools

These are positive effects These are positive effects on a community as a result on a community as a result of a new businessof a new business

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Economic Costs and BenefitsEconomic Costs and Benefits

Economic CostsEconomic Costs

Money spent on premises, roads Money spent on premises, roads for new business rather than for new business rather than other thingsother things

Increase in council taxation, egIncrease in council taxation, eg

RatesRates Council taxCouncil tax Water ratesWater rates

These are negative money effects These are negative money effects on a community as a result of a on a community as a result of a new businessnew business

Economic BenefitsEconomic BenefitsMore jobs – more people More jobs – more people employedemployedMore money available to spend More money available to spend in local shopsin local shopsBusiness growthBusiness growthImproved standard of livingImproved standard of living

These are positive money effects These are positive money effects on a community as a result of a on a community as a result of a new businessnew business

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What is a Stakeholder?What is a Stakeholder?

Stakeholders are people or organisations that have an interest or Stakeholders are people or organisations that have an interest or ‘stake’ in the way a company is run.‘stake’ in the way a company is run.

For ExampleFor ExampleIf a new television programme was introduced and attracted 30 If a new television programme was introduced and attracted 30 million viewers, who would benefit from it being a success?]million viewers, who would benefit from it being a success?]

Advertising Companies eg Cadbury’sAdvertising Companies eg Cadbury’sThe Costume MakersThe Costume MakersThe Set DesignersThe Set DesignersThe ScriptwritersThe Scriptwriters

These are all examples of Stakeholders as they have an interest in These are all examples of Stakeholders as they have an interest in the success of the programmethe success of the programme