Transcript WHAT DO BUSINESSES DO?

AN INTRODUCTION TO
BUSINESS
UNIT 1
PPT 2
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Businesses Exist ...
To develop a good idea
 To make a profit
 For charitable reasons
 To provide a public service
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TO DEVELOP A GOOD IDEA
Inventors create new products
 An idea for a product/service that no-one
else has brought to market
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TO MAKE A PROFIT ...
By selling something at a price which is
higher than it cost to provide
 Profit is the return on investment made by
the owner or owners. If there is no profit,
they may sell up and invest elsewhere
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FOR CHARITABLE REASONS ...
Volunteers work to support and help
others
 Funds are raised in a number of ways coffee mornings, concerts ...
 Red Nose Day for Comic Relief
 Company Sponsorship
 Collection tins
 Setting up “Charity Shop” to sell items
 Public Donations - wills, gifts etc
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TO PROVIDE A PUBLIC SERVICE
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Services provided by the Government and
paid for by our taxes
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Public Services include ...
National Health Service/hospitals
 Schools
 Roads
 Libraries
 Education
 Armed Services
 Police/Fire Services
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WHAT ARE THE AIMS OF
BUSINESSES?
Most profit-seeking
businesses aim to achieve
some of the following
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BUSINESS AIMS
Survival
Maximise Profit
Growth
Increase
Market Share
New Branches
Foreign Trade
more customers,
beating the competition
Quality
Product/Service
Excellent
Customer Service
Environmentally
Friendly
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Not all businesses focus solely on
making profits.
Body Shop and The Co-op are
examples of organisations which
have much wider aims.
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Improving conditions of:
The workforce
many firms provide a variety of “extras” or perks for their
employees eg
 cheap food, social clubs/sports facilities,
hairdressing and manicures, flexible hours
The suppliers
especially those in Third World Countries who are often
very badly paid
People in the community
many businesses set aside money to give to charities,
especially local ones
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A Charity might also have
different aims ...
Help more people
 Collect as much money as possible
 Recruit more people to help
 Open more charity shops
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Public Sector organisations might
also have different aims ...
Providing a quality service
 Providing an efficient service - eg hospital
appointments within a certain time
 Cutting costs
 Raising revenue - persuading the
Government to allocate more funds
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Who has an interest in the
business?
Many people can have an interest in
how a business is run and managed
and how it performs...
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These people are called…
Stakeholders
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Stakeholders of a large
company
Shareholders
Employees
Suppliers
Directors/
Managers
HM Revenue
and Customs
Customers
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Stakeholders include …
Owners
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owner/managers of small businesses
shareholders of larger companies
will share in profits if business does well
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Directors/Managers
If the business doesn’t do well, they could
be out of a job!
 If business does well could receive a
bonus
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Employees
As with managers, if the business does
badly, they might lose their jobs
 Want to have job security
 May not be enough money to pay their
wages
 May not receive pay increase if poor
performance
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HM Revenue and Customs
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They have to make sure they collect the
appropriate taxes
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Government
Provides employment, saves paying
benefits
 Creates wealth in the Economy
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Suppliers
To feel secure that they have a customer
to sell to
 Want to ensure they receive payment
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Customers
want to buy good quality products at a
reasonable price
 like variety of goods/choice
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Local Community
Want to ensure work is carried out safely
 Creates employment in the community
leading to increased wealth
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Pressure Groups
Environmental groups want to ensure no
work is causing pollution/damage to
environment
 Workers rights are maintained
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Banks/Investors
Want business to be successful to ensure
any loans will be repaid
 To receive return on their investment
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Social Costs and Benefits
Social Costs
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Traffic congestion
Traffic pollution – poor air
quality
Noise pollution
Health problems
These are negative
effects on a community
as a result of a new
business.
Social Benefits
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Improved road
network
New housing
New schools
These are positive effects
on a community as a result
of a new business
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Economic Costs and Benefits
Economic Costs
Money spent on premises, roads
for new business rather than
other things
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Increase in council taxation, eg
Rates
Council tax
Water rates
These are negative money effects
on a community as a result of a
new business
Economic Benefits
jobs – more people
employed
More
More
money available to spend
in local shops
Business
growth
Improved
standard of living
These are positive money effects
on a community as a result of a
new business
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What is a Stakeholder?
Stakeholders are people or organisations that have an interest or
‘stake’ in the way a company is run.
For Example
If a new television programme was introduced and attracted 30
million viewers, who would benefit from it being a success?]
Advertising Companies eg Cadbury’s
The Costume Makers
The Set Designers
The Scriptwriters
These are all examples of Stakeholders as they have an interest in
the success of the programme
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