Business studies: Objectives and Ownership

• A business is an organization that sells goods or services for money, with the primary goal of making a profit, but some businesses prioritize societal benefit.
• Entrepreneurs are individuals who undertake the risk to start and manage businesses, requiring creativity, leadership, and problem-solving skills.

Key Business Objectives

• Profit maximization involves making as much money as possible.
• Survival is especially important for new businesses.
• Growth refers to expanding into new markets or increasing market share.
• Customer satisfaction focuses on building brand loyalty.
• Ethical objectives involve efforts such as reducing environmental impact.

Types of Business Ownership

• A sole trader business is owned by one person who keeps all profits, but the owner has unlimited liability.
• A partnership involves two or more people who share profits and responsibilities in the business.
• A private limited company (Ltd) is owned by private shareholders, often family or friends, and has limited liability.
• A public limited company (PLC) is a large business with shares sold on the stock market, allowing for significant growth but risking loss of control to shareholders.

Marketing

• Marketing involves understanding customers and promoting products effectively, focusing on the marketing mix (4Ps).
• Product refers to what the business is selling, including features, design, and branding.
• Price involves how much the business will charge, using pricing strategies like penetration or premium pricing.
• Place refers to where the business will sell its products, such as online or in retail stores.
• Promotion covers how the business will advertise its products through social media, TV ads, or sponsorships.

Finance & Ratio Analysis

• Revenue is calculated by multiplying the selling price by the quantity sold.
• Fixed costs are costs that remain constant, such as rent.
• Variable costs are costs that change with output, such as raw materials.
• Profit is calculated by subtracting total costs from revenue.
• The break-even point is calculated by dividing fixed costs by the selling price minus the variable cost per unit, indicating how many units must be sold to make a profit.
• Gross Profit Margin (%) = (Gross Profit ÷ Revenue) × 100
• Net Profit Margin (%) = (Net Profit ÷ Revenue) × 100
• Current Ratio = Current Assets ÷ Current Liabilities (measures liquidity)

Operations & Production

• Job production involves one-off, custom-made products.
• Batch production involves making a set number of items.
• Flow production involves continuous production.
• Quality control involves checking products at the end of the production process.
• Quality assurance involves checking quality at every stage of the production process.

Human Resources (HR)

• Internal recruitment involves hiring from within the company.
• External recruitment involves hiring from outside the company through job adverts or agencies.
• Maslow's Hierarchy of Needs theory suggests employees need basic pay, job security, and career growth.
• Herzberg's Two-Factor Theory suggests employees are motivated by hygiene factors (salary, working conditions) and motivators (recognition, responsibility).