Sec1 Part 9

Section 1: Understanding Business Activity
Chapter 4 & 5
PART – 9
❖ Public Sector
➢ The public sector includes every business owned by the government.
➢ Businesses in this sector are public services, i.e. education, transport, hospitals, education and police
➢ Usually these businesses have been nationalized (used to be private sector but government bought it)
➢ Capital comes from taxes, by tax payer
❖ Key differences between all types of business:
❖ Business Objectives:
➢ Business objectives are aims or targets that a business works towards.
➢ Business objectives give clear target to managers and employees, And boost the workers’ motivation
➢ Private sector business objectives:
• Business Survival o Generating profit o Returns to shareholders
• Growth of business o Market Share o Service to community (CSR)
❖ Stakeholder:
➢ A stakeholder is individual or group of people that is interested in or directly affected by the
performance or activities and decisions of a business.
➢ There are two types of stakeholder groups:
• Internal Stakeholders work/own the company
• External Stakeholders are outside of the business
➢ Each stakeholder group has different objectives for the performance of the business
➢ Internal Stakeholder’s objectives are payments or profits, they want business growth so value of
investment increases or they get higher status/power
➢ Customers objectives are reliable products, value for money, good quality, good design and good service
➢ Government objectives include: money from taxes, will employ more people, increase country’s output
➢ Banks objectives are to make profit out of loans
 Since different stakeholders have different objectives, it may cause conflict, to try to satisfy
all the stakeholders. For example: customers want cheap products but workers want higher
salaries. Therefore, managers have to compromise to decide which objectives are best for
the company
Stakeholder Main Features Most likely objectives for the
Group stakeholder group
Owners (Internal) • They put capital in to set up and expand the • Share of the profits so that they gain a rate
business of return on the money put into the
• They will take a share of the profits if the business business.
succeeds • Growth of the business so that the value of
• If the business does not attract enough customers, their investment increases
then they may lose the money they invested
• They are risk takers
Workers (Internal) • Employed by the business, employees. • Regular payment for their work
• They have to follow instructions of the managers • Contract of employment
and may need training to work effectively. • Job Security – workers do not want to look
• They may be on full or part time contracts and a for new jobs frequently
temporary or permanent basis. • Job that gives satisfaction and provides
• If there is not enough work for all workers, some motivation.
may be made redundant (retrenchment) and asked
to leave.
Managers • They are also employees and control the work of • High salaries because of the important
(Internal) other workers work they do.
• They take important decisions • Job Security – depending on success
• Their successful decisions could lead to business • Growth of the business so that managers
expansion. can control a bigger and better known
• If they make poor decisions, the business could fail. business, giving them more status and
power.
Customers • Important to every business, they buy the goods or • Safe and reliable products
(external) services the business produces or provides • Value for money
• Without enough customers the business makes • Well-designed products of good quality
losses and eventually fails • Reliability of service and maintenance.
• The most successful businesses try to find out what
consumers want before making goods or providing
services – this is called market research.
Government • They are responsible for the country’s economy • Want the business to succeed in their
(external) • They pass laws to protect consumers and workers country. Successful businesses will employ
workers, pay taxes and increase the
country’s output.
• Expect all firms to stay within the law –
laws affect business activity
Whole Community • Heavily affected by business activity. E.g. • Jobs for the working population
(external) Dangerous products might harm the population, • Production that does not damage the
factories can produce pollution that damages environment
rivers, the sea and air quality. • Safe products that are socially responsible.
• Businesses also create jobs and allow workers to
raise their living standards. Many products are
beneficial to the community like medicines or
public transport.
Banks (external) • They provide finance for the business’s operations. • Expect the business to be able to pay
interest and repay capital lent – business
must remain liquid.

Sec1 Part 9

Uploaded by

Copyright:

Available Formats

Sec1 Part 9

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sec1 Part 9

Uploaded by

Copyright:

Available Formats

Section 1: Understanding Business Activity

❖ Key differences between all types of business:

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.