Cooperatives and Social Enterprises Quiz

Business Organization and Environment

• Business - any organization involved in the production of goods and services
• Business activity - the process of turning inputs (land, labor, capital, enterprise) into outputs (finished goods and services) to meet customer needs.
• Factors of production:
  • Land - natural resources, renewable and non-renewable
  • Labor - human effort
  • Capital - manufactured resources used in production (machinery, equipment, finance)
  • Enterprise - skills, experiences, and willingness to take the risk of setting up a business (entrepreneurship)
• Scarcity - not enough goods and services to meet all wants
• Opportunity costs - the benefit forgone from the next best alternative use of resources
• Goods and services differ in four ways:
  • Intangible - services are not physical
  • Inseparable - service delivery and the service received are linked
  • Perishable - services cannot be stored
  • Variable - service experiences can vary from customer to customer
• Business functions:
  • Human resources - manages workforce, including recruitment, wages, communication, and motivation
  • Finance and accounts - manages financial resources of the organization

Specialization & Division of Labor

• Specialization - concentrating on specific tasks
• Division of labor - breaking down production into individual tasks
• Businesses produce different types of goods and services:
  • Consumer goods - for the general public
  • Capital goods - used to produce other goods and services

Economic Sector

• Primary sector - extraction of natural resources (agriculture, mining)
• Secondary sector - manufacturing and construction
• Tertiary sector - providing services to customers (retail, healthcare)
• Quartenary sector - knowledge and information based activities (research, education)

Entrepreneurship

• Entrepreneur - individual who plans a business and takes risk of starting and managing it
• Characteristics of successful Entrepreneurs
  • Creativity, Visionary, Self-motivated, Leadership, Risk management, Risk tolerance, Time management, Team work

Types of Business Entities

• Private sector - businesses owned and controlled by individuals or companies for profit
• Public sector - businesses owned and controlled by the government for public good

Advantages and Disadvantages of Privately Held Companies

• Advantages:
  • Incorporation, creating a separate legal entity.
  • Better control compared to publicly-held companies.
  • Easier to raise significant finance.
  • Greater privacy compared to publicly-held companies.
  • Limited liability for shareholders.
• Disadvantages:
  • Selling shares limited to family, friends and employees.
  • Operate at greater expense than a sole trader or partnership.
  • Higher legal and auditing costs.
  • Risk of takeover by a larger entity.

Advantages and Disadvantages of Public Limited Companies

• Advantages:
  • Potential to raise large amounts of funds.
  • Easier to borrow money from banks due to reduced risk.
  • Continuity of operations with a change of owners.
  • Economies of scale are possible.
• Disadvantages:
  • Loss of privacy due to public access to financial details.
  • Higher costs and administrative complexities.
  • Increased risk of a takeover bid.
  • Diseconomies of scale can occur.

Types of Organizations

• Unincorporated businesses - do not have separate legal identity from their owners; liability for business debt is unlimited
  • Sole trader
  • Partnership
• Incorporated Businesses - have legal identity separate from their owners; limited liability (liability for business debts limited to the amount invested)
  • Private limited company
  • Public limited company

Business Objectives

• Objectives are SMART
  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time-bound

Business Growth

• Economic of scale - average cost of production decreases as the organization increases the scale of its operations.
• Diseconomies of scale - average cost of production increases as the organization increases the scale of its operations
• Internal economies of scale (occur inside a firm)
  • Purchasing, Marketing, Managerial, Technical, Risk-bearing.
• External economies of scale (occur in the industry)
  • Technological progress, Improved transportation networks, Abundance of skilled labour, Regional specialization
• Internal Diseconomies of Scale -
  • Lack of control and coordination, Poor working relations, Limited communication
• External Diseconomies of Scale - higher rents, local market conditions, traffic congestion

Finance and Accounts

• Sales revenue - the earnings from the sale of goods or services.
• Cost of sales - costs directly related to producing sales.
• Gross profit = sales revenue - cost of sales
• Operating expenses - costs of running a business.
• Net profit = gross profit - operating costs
• Depreciation - a fall in value of noncurrent assets over time.
• Revenue expenditure - costs relating to day-to-day running of a business.
• Capital expenditure - money spent on items that will last more than one year.
• Budgeting
• Cashflow forecasts - predict the future movement of cash in and out of a business over a period of time

Investment Appraisal Methods

• Payback Period - time taken for investment to recover its initial investment cost.
• Average Rate of Return - average annual profits of the investment as a percentage of the initial investment cost.

Final accounts

• Income statement - reports the income and expenses of a business over time period
• Balance sheet - snapshot of a company's financial position at a point in time

Organizational Structure

• Accountability – responsibility for particular tasks/outputs
• Responsibility - who is in charge of a specific task or area of work
• Span of Control - The number of people directly answerable to a manager

Leadership and Management

• Leadership - ability to inspire others in achieving a common goal
• Management - getting things done through others, focusing effectively on achieving objectives
• Types of leadership styles :
  • Autocratic, Democratic , Laissez-faire

Motivation Theories

• Taylorism - money is the primary motivator
• Maslow's Hierarchy of Needs - individuals motivated by a hierarchy of needs from basic physiological to self-actualisation
• Herzberg's Two-Factor Theory - motivation depends on factors that cause satisfaction and factors that prevent dissatisfaction
• McClelland’s Acquired Needs Theory - Achievement, Affiliation, and Power motivate people.

Motivation & Demotivation

• Factors affecting motivation and demotivation of staff
• Methods to improve motivation and reduce demotivation

Workplace Relationship

• Conflict definition
• Sources of conflict in the workplace
• Approaches used by trade unions (or the process involved in negotiation)
• Types of conflicts
• Strategies for conflict resolution
• Approaches to conflict resolution
  • Conciliation, arbitration

Production Planning

• Stock control
• The just-in-time approach
• The just-in-case approach
• Production planning process
• Importance for production efficiency

International Marketing

• Factors that influence international marketing decisions
• Benefits and limitations of international marketing
• Marketing mix adaptations for international marketing
• Marketing models for analyzing the effectiveness of international sales

Marketing

• Market size
• Market share
• Market growth
• Market research (Primary and Secondary)
• Marketing mix (4 Ps): Product, Price, Place, Promotion
• Marketing strategies
• Branding
• Market orientation vs Product orientation

Operations Management

• Facility layout (different layout designs for factories)
• Technology
• Lean production

Information Systems

• Data analytics
• Databases
• Critical infrastructures (servers, data centers, etc.)
• Cyber security
• Cybercrime, data breaches.