business

studies
section 1 :
LABOUR IN BUISNESS
factors of production : specialisation : occurs when a person or a business
resources needed to produce goods or concentrates on what they are best at
services. *specialised machinery and tech widely available
land - all natural resources provided by *increases competition leading to cost of sale low
nature *people realise having higher living standards can
labour - no. of people able to produce result from being specialised
goods division of labour : production process is split up into
capital - finance and equipment needed different tasks and each worker performs one of
for manufacture these task(form of specialisation)
enterprise -skills and risk-taking ability ADV.
of a person who guides a business q/c to train workers as fewer skills need to be learnt
scarcity : lack of products to fulfil the increase efficiency / output as specialisation occurs
total wants of the population DIS.
worker become board / if worker miss production stop

Added value : is the difference between classification of business

the selling price of a product and the cost
of bought in materials and components
Stages of economic activities :
if a increase in the value is not added then
primary sector - extracts and uses the natural
other cost cant be paid for nor profit will
resources of earth to produce raw materials used by
be made
other businesses (e.g. farming , fishing , mining )
to increase added value you either :
secondary sector - manufactures goods using the raw
increase selling price - may lead to
materials provided by the primary sector (e.g.
potential customer dissatisfaction
construction , bakery , assembly lines )
decrease cost of product - may lead to
tertiary sector - provides services to consumers and
lower quality as cheep product bought
the other sectors of industry (e.g. transport )
combination of both

countries and important of stages of economic activities :

the 3 sectors of the economy are compared by - countries total workforce in each sector
developing nation : increase workforce in primary sectors- developed: secondary + tertiary
de industrialisation : occurs when there is a decline in importance of the secondary sector of
industry in a country
reasons for de-industrialisation :
*resources of primary products deplete
*developed economies lose competitiveness in manufacturing compared to developing economies
*standard of living of developing economies increase leading to more tertiary businesses and lack
of wanting to work in factories and assembly lines
mixed economy : has both private and public sector business
private sector - owned by privet people not government , make there own decisions and pricing
public sector - owned by the state , make the decisions
capital : money invested in a business
 business growth and
size

ENTREPRENEUR : is a person who organises ,

BUSINESS PLAN :
operates and takes risk for a new business
document containing the business objectives and
venture
important details about the operations , finance
Characteristics:
and owners of the business
Hard working
7 Characteristics :
risk taker
-Description of the business
creative
-Product and Services they sell
optimistic
-The market
self confident
-Location and how the product reaches consumer
innovative
-Organisation structure
independent
-Financial information
effective communicator
-Business strategy
DISADVANTAGE of being a entrepreneur :
WHY do you need a Business plan :
risk , opportunity cost, lack knowledge
to get finance (e.g. bank loans)
ADVANTAGES of being a entrepreneur:
to reduce risk of potential failure of a business
independent , high income , interest

WHY GOVERMENT SUPPORT BUSINESS: BUSINESS SIZE :

to reduce unemployment who compare sizes of businesses:
to increase competition(more consumer choice) investors, government, competitors, worker, bank
to benefit society(social enterprises) how can we measure the business size :
to increase output( increase GDP) -number of people employed
HOW? -value of output
-providing low cost premises -value of sale
-loans for small businesses at lower interest -value of capital employed
-train employees Capital employed : is the total value of capital
-make research facilities available for them used in the business

BUSINESS EXPAND:
benefits : EXTERNAL GROWTH EXAMPLES :
higher profit, status, lower costs, marketshare 1. horizontal integration - is when 1 business
Ways of expanding: takes over / merge in the same industry at the
Internal growth - business expands in existing same stage of production
operations 2.vertical integration - is when 1 business take-
External growth -business takes over another over / merges with another business in the same
business industry at different stages of production
takeover - when 1 business buys out the owners 3.Conglomerate integration - is when a business
of another business takes-over or merges with another business in a
merger - the owners of 2 businesses agree to different industry
join the business together

Backward vertical :
benefits of horizontal integration : Forward vertical integration :
assure supply of materials
reduce competition assured outlet of its product
greater profit margins
economies of scale greater profit margins
prevent supply going to
larger share in the market consumer need can be obtained
other competitors
Drawbacks of growth :
-difficult to control why might business remain small :
-growth leads to poor communication problem - industry the business operate in , easy for
-expansion costs are high competitor to set up businesses
-integration leads to difficulty -market size , small markets have a small number
How to overcome them : of customers meaning only limited growth
-operate business in small units -owners objective , may want to keep control , to
-use better ways of communication know the staff and consumers wants
-expand slowly

Business
Cause of business failure : organisation
- lack of management skill , bad decision making
-change in business environment , may not Limited liability :
implement new tech or don't detect customer liability of a shareholder in a company is
wants limited to the amount invested
-liquidity problem , BROKIEES LMAO Unlimited liability :
- over expansion , lose control owners of a business can be help responsible
for the dept. of business they own, liability
not limited to the amount invested in the
business

Sole trader Partnership

is a business owned by one person is a form of business in which two or more people
Advantages : agree to jointly own a business
-few legal regulations Advantages :
-complete control over business -more capital available
-dose not have to give info about business -responsibilities are split
Disadvantages : -risk is shared and both are motivated together
-has to do all the work himself Disadvantages :
-unlimited liability -unlimited liability
-liquidity problem (short term cash ) -dose not have separate legal identity
- business likely to remain small -disagreement take time
-if he is ill he cant manage the business -profit is shared

Public limited companies

Privet limited companies
are businesses owned by shareholders but can
are businesses owned by shareholders but they
sell shares to the public and tradeable on the
cant sell to the public
stock market
shareholder : are the owners of a limited
Advantage :
company, buy shares representing ownership
- limited liability
incorporated businesses : are companies that
-incorporated business
have separate legal status from their owner
-generate large sums of capital
Advantage :
- no restriction of buying , selling of shares
-large sum of capital generated fast
- high status
-limited liability
Disadvantage :
-able to keep control if owner have 50%>
- legal formalities are quite complicated
Disadvantages :
-more regulation and control
-legal issues
- selling share to public is expensive
-cannot be sold to anyone else
- owners lose control
-companies actions are available to others
-investing issues
Dividends : are payments made to the AGM - is a legal requirement for all companies for
shareholder to attend and vote on who they want to
shareholder from the profit (after tax)
be the board of directors for the coming year
 Franchise - is a business based upon the use of social enterprise - has social objectives as well as
brand image , promotional logos and trading an aim to make profits to reinvest back into the
methods of a existing business business

franchisee
franchisor
guy who wants to use the brand
guy who owns the brand image
image

- franchisee buys the licence

-business failure reduced
-expansion is faster
-franchisor pay for adverts
Advantage -franchisee do the work
-franchisor do the training
-product sold obtained from
-banks lend to franchise
franchisor
-poor management of 1
-less independence
franchised outlet could lead to
Disadvantage -licence fee must be paid
bad reputation
-royalties to franchisor
- franchisee keeps profits

Public corporation
Joint venture
is a business in the public sector that is run by
is when two or more businesses start a new
the government
project together , sharing capital and risk
Advantage :
Advantages :
-propaganda
-costs are shared
-cannot be monopolised
-risk are shared
-create jobs
-local knowledge
Disadvantage :
Disadvantage :
-no shareholder
-profit shared
-lead to inefficiency
-disagreements
-no competition to public corporations
-different management styles
-used for political reasons

objectives

Business objective are the aims that business

works towards ; survival , profit , return to owner - put in capital and are risk takers , there fore
shareholder , growth , market share , service objective is to increase profit margin and growth of
the business
worker- employed in the business so there objective is
Profit : is the total income of business - costs to get paid on time and treated equally , growth
market share : is the % of the total market manager - are employed so there objective is job
sales held by 1 business security and high salaries and growth
social enterprise : profit to reinvest back in customer - they buy the goods that businesses
the business produce so there objective is safety of product and
reliability of the service , value for money
stakeholder groups : government -passes laws to protect workers , wants
owner , worker , manager , consumers , business to grow to provide jobs and output
government , community , bank Banks - provide finance so objective is to make high
profits
stakeholder : is any person/group with a direct community - business creates jobs so like yh
interest in the performance of a business
 section 2 PEOPLE IN
BUSINESS

Motivating
employees
method of motivation financial
Why work : Wage
Motivation - is the reason why employees want is a payment to the employee usually paid weekly
to work hard and work effectively for the Advantage :
business -worker gets paid regularly
reasons of motivation : -paid overtime if employee works for longer hours
-Money(fulfil your wants) Disadvantage :
-Security(knowing you wont lose your job) -wages have to be calculated taking time
-Social needs(making friends and groups) -wage clerk employed costing more money
-Feeling sense of accomplishment
-Job satisfaction(enjoyment) Time rate
Benefits of a motivated work force : amount paid to employee for 1 hour of work
-High output per worker Advantage :
-Better communication between manger -easy to calculate the wage
-Loyal workforce (lower cost of recruitment) Disadvantage :
-Low rate of leaves(reduce halting of output) -good/bad worker get paid same
-Low rates of strikes (avoid bad reputation) -supervisors needed to ensure workers working
Piece rate
non financial methods amount paid to employee for each unit output
Advantage :
Job satisfaction - is the enjoyment derived -encourages workers to work fast , increasing output
from feeling that you have dose a good job Disadvantage :
-workers rush the product reducing quality
Job rotation - involves workers swapping -workers who ensure quality will get paid less
around and doing specific task for only a limited -if machine breaks employee makes less money
time and then changing around again
Salary
Job enrichment - involves looking at jobs and is payment for workers paid monthly
adding tasks that require more skill and/or Advantage :
more responsibilities -salary is only calculated once a month
-owners have money for longer for emergencies
Teamworking - involves using groups of workers Disadvantage :
and allocating specific tasks and -workers might need money for emergencies
responsibilities to them -no payment for extra time worked

Training - is the process of improving a Commission

workers skill is payment related to the number of sale made
Disadvantage :
Promotion - is the advancements of an -stressful for staff
employee in an organisation for example to a -internal competition between staff
higher job or level
Bonus
is additional payment above basic pay for good work
Disadvantage :
Fringe benefits :
-staff may expect it every year
-company car
-discounts on products Profit sharing
-health card paid for proportion of companies profit paid to employees
-education free Disadvantage :
-free accommodation -if profit low employee dissatisfied
-pensions
-free trips abroad
 Organisation and management
Organisation charts
What is organisational structure ? Chain of command - is the structure in an organisation
organisational structure - refers to the levels of which allows instructions to be passed down from senior
management and division of responsibilities management to lower levels of managements
within the organisation Descriptions :
organisational chart - refers to a diagram that shows how everyone is linked together in an
outlines the internal management structure organisation
Hierarchy - refers to the levels of management Advantage :
in any organisation from highest to lowest -Very individual can see there position and who they are
Level of hierarchy - refers to managers and accountable to and have authority over(reduce fights)
other employees who are given a similar level of -shows the links and relationship between different
responsibilities in an organisation departments within the organisations
-gives a sense of belonging ( improve motivation )

Span of control :
is the number of subordinates
working directly under a manager
Business A : tall structure and a
long chain of command
-14 people working under 1 person
Business B : wide structure and
short chain of span
-15 people working under 1 person

without effective management the business may :

Advantage of short chain command: - lack a sense of control and direction
- communication is quick and accurately - lack coordination between department wasting time
(shorter wait time for customers - lack control of employees
increasing customer satisfaction) - lack organisation of resources leading to lower outputs
-managers are less remote with lower
levels of hierarchy (lead to loyalty)
-each manager is more responsible for Delegation :
more subordinates (less direct control of means giving a subordinate the authority to perform particular
each worker and they will feel ore tasks( not final decision ) but if task is not performed to
trusted , job satisfaction) standard the manager has to take responsibilities
Advantages of delegation for the manager :
-he was able to concentrate his time on other important
management functions
responsibilities -Managers are less likely to make mistakes if some of the tasks
Directors- are senior managers who lead are performed by their subordinates
a particular department or division of -Managers can measure the success of there staff more easily
business they can see hoe well they have done in performing the tasks
Line managers- have direct responsibility delegated to them
for people below them of an organisation Advantage of delegation for the subordinates :
Supervisors- are junior managers who -the work becomes more interesting (job satisfaction)
have direct control over the employees -employee feels more important and have trust (loyalty)
below them in an organisation -help train workers and they can make progress in organisation
Staff managers- are specialists who (giving them more career opportunities e.g. promotion)
provide support, information and assists DELEGATION INCREASE TRUST BEDWEEN WORKER AND
line managers MANAGER
good managers should : Tasks of effective Qualities of managers
-motivated employees managers -intelligence
-give advice to staff -plan for future -self confidence
-inspire staff -organise and delegate -determination
-manage resources effectively -coordinate departments -initiative
-keep costs low -command and guide other -communication skills
-increase profitability -assess the work -enthusiasm

Leadership style : are the difference approaches to dealing with people and making decisions when in a
position of authority

Autocratic leadership : Democratic leadership : Laissez faire leadership :

where managers expected to be in get other employees involved in makes board objective known and
charge of the business and to decision making process they make there own decision
have there orders followed Advantage : Advantage :
Advantage : better decisions(customer happy) encourages creativity/responsible
quick decision making Disadvantage : Disadvantage :
Disadvantage : decisions unpopular with workers wont work in organisations were a
demotivating for worker (no input) wont work clear decision is needed

Trade union
group of employees who have joined together to ensure there interest is protected
Advantage for employee :
-improve worker conditions
-improve conditions of employment
-improve benefits for member who cant work due to illness
-improve job satisfaction
-secure employment when there is a closed shop
Disadvantage for employee :
-costs money to be a member
-workers may be required to take industrial action even if they don't agree
Advantage for employer :
-help improve communications between workers and management
-wage agreements are easier
Disadvantage of employer :
-unions can strike leading to bad reputation and demotivated and halting of productivity
-wages would be higher leading to a higher cash outflow and lower profit margin
Closed shop : when all employee must be members of same trade union

recruitment , selection , training of employment

HR department
Recruitment - is the process from identifying that the business needs to employ someone up to the point
at which applications have arrived at the business
Employee selection - is the process of evaluating candidates for a specific job and selecting individual for
employment based on the needs of organisation
Human Recourses department :
Recruitment and selecting - involves attracting and selecting candidates for vacancies that arise
Wages and salaries - these mush attract and retain the right people and must be sufficiently high to
motivate staff
Industrial relations - there must be effective communication between representatives and the workforce
,they should resolve disputes and put forwards some suggestions of improvement
Training programmes - involves assessing and fulfilling the training needs of employees , linked to the
future plans of the business
Health and safety - The business needs to make sure that it complies with the laws of safety
Redundancy/dismissal - just firing people by the law
 Recruitments and
selection

Process summarised :
Job analysis : identifies and records the Vacancy arises - someone resign from company
responsibilities and tasks relating to a job Job analysis - candidates see the tasks in job
Job description : outlines the responsibilities and Job description - NO CLUE
duties to be carried out by someone employed to do Job specification -candidates see job requirement
a specific job Job advertise -HR puts up billboards about vacancy
Job specification : is a document which outlines the Application - HR finds potential employees
requirements qualifications for a job Interviews - potential employees called in
New employees - hire a new dude

External Recruitment
is when a vacancy is filled by someone who is not an
Internal recruitment
existing employees and will be new to the business
is when a vacancy is filled by someone who is an
ways :
existing employee of the business
-local newspaper , don't usually require high skill
Advantage :
-national newspaper , requires skill
-quick and cheaper than external
specialist magazines , specialised skill
-business already knows potential person is reliable
online recruitment, job seekers
-person knows how organisation works, no induction
recruitment agency , businesses which find jobs
-will be motivating as it is a promotion
gov job centres , vacancies can be advertised
-person knows the expectations of the business
Advantage :
Disadvantage :
-better skilled person can be found
-no new ideas /experience come to business
-new ideas
-rivalry among existing members (jealousy)
Disadvantage :
-quality of internal candidates might be low
-cost high and takes time
-require induction training

Which candidates to hire ?

part-time/full-time worker
based off :
part-time :
-work experience
employees that work 30 - 35 hours a week
-education / qualifications
Full-time :
-Age
employees will usually work 35 hours or more a
-internal
week
-external

training
why train : Advantage of part-time employees :
-introduce new equipment to employee -more flexible hours
-improve efficiency of workforce -easier to ask employees to work at busy hours
-provide training for untrained worker -easier to extend business operating hours
-decrease supervision need -reduce business cost compared to full-time workers
-improve opportunity for promotion -easier to make part-time worker redundant
-decreasing chances of accidents Disadvantage of part-time employees :
-less likely to seek training
Induction training :
-take longer to recruit 2 part-time workers
is an introduction given to a new employee -less likely to be promoted , lower motivation
explaining the businesses activity's , customs and
-more difficult to communicate
procedures and introducing them to their fellow
workers
Advantage :
-helps new employee settle in job quickly
-may be legal requirement to give health
-workers less likely to make mistake
Disadvantage :
-time consuming / wages paid but no work done
-delays the start of employee commencing the work
On the job training : Off the job training :
occurs by watching a more experienced worker involves being trained away from workplace , usually
doing the job by specialist trainers
Advantage : Advantage :
-costs less -many skills can be taught
-ensures some output from worker while training -business will only pay for the course
-training tailored to the specific needs of the -employee can become multi skilled
business -up to date business practices
Disadvantage : Disadvantage :
-trainer would be as productive as usual -cost are high
-trainer may have bad habits that may pass on -wages paid but no work done
-may not be training qualification outside business -easier to find a already trained employee

workforce planning

Workforce planning : Hr planning in workforce :

is establishing the workforce needed by the -find out the skills of existing employees ,don't
business for the foreseeable future in terms of the include people who about to leave wilfully
number and skills of employees required -consult with existing staff if they want any new job
Why decrease workforce ?: -preparing a recruitment plan
-introduction of automation
-falling demands for there good thus can pay staff
-factory/shop/office closure Ways of saying : PISS OFF UR FIRED LIL -
-relocating factory abroad Dismissal - employment ended against there will
-business merger / take over leading to too much usually for not working in accordance with
staff employment contract
Redundancy - is when an employee is no longer
needed and so loses their job . not due to any aspect
Which worker to make redundant : of their work being unsatisfactory
-some workers may volunteer to leave
-length of time employed by the business Legal control :
-essential skills of workers -employment contract
-employment history -unfair dismissal
-department of business that needs to lose staff -discrimination
health and safety
-minimum wage
Employment contract :
legal agreement between an employer and employee
listing the rights and responsibilities of workers
impact :
-both parties know there expectations
-provides security of employment to worker
-if employee dose not meet contract dismissal=OK