Business Stakeholders and Value Creation

Value Creation for Stakeholders

• Businesses serve various stakeholders, including shareholders, employees, customers, suppliers, and communities.
• The role of business is to create value for these stakeholders by delivering quality products and services, generating returns on investment, fostering employee satisfaction and growth, and being responsible corporate citizens.

Globalization and Trade

• Businesses facilitate globalization by expanding into international markets, engaging in trade and investment, and participating in global supply chains.
• This promotes economic integration, cultural exchange, and access to diverse products and opportunities worldwide.

Types of Income

• Wage: money received by workers, usually hourly or daily, for services provided to a business.
• Salary: a fixed regular payment, usually paid fortnightly or monthly, and is expressed as an annual sum.
• Bonus: a sum of money added to a person's wages as a reward for good performance.
• Overtime: time during which work is done outside regular working hours, paid at a higher rate.
• Commission: a percentage of a sales price received by a salesperson for their services.
• Fringe benefits: an extra benefit supplementing an employee's money wage or salary.

Businesses and Income Generation

• Businesses create job opportunities and employ individuals across various sectors and industries.
• Through wages, salaries, benefits, and bonuses, businesses provide income to employees, enabling them to support themselves and their families.
• Employment not only provides financial stability but also fosters skill development, career advancement, and social well-being.

Social Influences on Risk-Taking

• Social factors, such as peer pressure, social norms, and cultural expectations, can influence individuals' risk-taking behavior.
• People may engage in risky activities to conform to group norms, gain acceptance or approval from peers, or enhance social status.

Financial Incentives and Risk-Taking

• In economic contexts, individuals may take risks in pursuit of financial gain or economic opportunity.
• The expectation of financial rewards can motivate individuals to take calculated risks and engage in entrepreneurial activities.

Emotional Drivers of Risk-Taking

• Emotional factors, such as thrill-seeking, adrenaline rushes, or the desire for emotional arousal, can also drive risk-taking behavior.
• People may engage in risky activities for the excitement, stimulation, or emotional intensity they provide.

Technology and Business

• Technology changes the way things are done across the range of business, including administrative and operations technology.
• Over the next five to ten years, it is expected that there will be more internet-connected devices, including computers, phones, appliances, vehicles, and robots.

Competition and Market Concentration

• Competition between businesses to be the 'market leader' or to win customer loyalty can benefit the consumer and the business.
• Each business aims to achieve a sustainable competitive advantage over its competition in order to capture a larger portion of the market.

Local and Foreign Competitors

• A business will be influenced by both local and foreign competitors.
• Local competitors are those who produce or sell a good or service in the same market.
• Foreign competitors are those businesses located overseas or offshore.

Diversification Strategies

• Diversification occurs in several ways, including:
  • Diversifying product range by introducing more products
  • Geographically diversifying by trading in multiple locations
  • Making revenue stream more diverse
  • Brand extension, which involves offering a greater range of products within the target market and new markets as well

Business Life Cycle

• The third stage of the business life cycle presents unique challenges to the owner.
• It requires a great deal of rethinking about how the business should be operated to guarantee survival.
• This type of industry has several businesses operating in the maturity phase and each has a relatively stable market share.
• The business might lose its 'family' atmosphere and be replaced with a more clinical, professional culture.

Final Stage of Business Life Cycle

• Once a business reaches this stage, it is faced with three possible outcomes:
  • Steady state — the business continues to operate at the level it has been during the maturity phase
  • Decline — falling sales and profits ultimately resulting in business failure
  • Renewal — increasing sales and profits due to new growth areas