Business Studies PDF

## Term 1 Topic 1: Micro Environment ### Introduction There are three components of the business environment: - micro - market - macro The components are interrelated and can have an effect on each other. ### Unit 1: Components of the Micro Environment #### 1.1 Vision, Mission, Goals and Objecti...

## Term 1 Topic 1: Micro Environment ### Introduction There are three components of the business environment: - micro - market - macro The components are interrelated and can have an effect on each other. ### Unit 1: Components of the Micro Environment #### 1.1 Vision, Mission, Goals and Objectives ##### Vision Vision should be clear and concise, giving an idea of a desired image. It reflects: - The dream of the business - What it wants to become in the future ##### Mission The mission will: - Describe the purpose and basic activities of the business - Explain why the business exists - Explain how it aims to achieve its vision. ##### Goals Goals are long-term aims that the business expects to achieve: - It gives the business a sense of direction. ##### Objectives Objectives explain how a goal will be reached: - Short-term steps of how a goal will be reached. #### 1.2 Organisational Culture Organisational culture is the personality of the organisation. Culture is made up of different beliefs, values, norms, and expectations of employees and management. - It influences people's actions and attitude. - A positive culture helps staff to be motivated and productive. - A negative culture makes workers feel discouraged, disinterested, and could lead to conflict. #### 1.3 Organisational Resources ##### Physical Resources - Timber, fruit, fish, factory machinery, trucks, machinery and equipment, land and buildings, computers, telephone ##### Information and Technological Resources - Books, statistics, websites, emails, research articles ##### Financial Resources - Capital - own and borrowed ##### Human Resources - Employees #### 1.4 Management and Leadership Managers have FOUR main tasks or basic activities (POLC): - **Planning:** Look at what you need to do. Decide how to do it. - **Organising:** Use all resources in the business to achieve goals. - **Leading:** Guide and motivate people to carry out plans of the business. Give direction. - **Control:** Check that the business activities are carried out as planned. All managers need to carry out these tasks for their areas of responsibility. The balance of the FOUR main tasks will differ from business to business and from one level to another. #### 1.5 Business Organisational Structure (Organisational Chart / Organogram) Every business must be organised into a basic structure that shows: - Tasks - Level of authority - Responsibility Structure shows the flow of instructions and feedback. #### 1.6 Eight Functions and Activities of the business - **General Management:** Manage and oversees the other seven business functions by planning, organising, leading and control, so that business goals can be achieved. - **Purchasing Function:** Buys goods and services needed by other functions. Goods and services must be bought at the right price and time, in the right quantities and of the right quality. - **Production Function:** Changes raw materials into finished products by combining raw materials with labour, capital and entrepreneurial skill. - **Marketing Function:** Responsible for sale of goods and services to meet needs of consumers. The right product must be sold at the right price in the right place and using the best promotion. - **Public Relations Function:** Responsible for creating a positive image of the business to the public. - **Human Resources Function:** Responsible for finding the correctly qualified employees as well as training, evaluating and remunerating them. - **Administration Function:** Responsible for collecting and processing information used for decision-making as well as general office work such as filing and storing of information. - **Financial Function:*** Responsible for planning an managing all the funds and assets in the business as well as investments. ### Unit 2: Eight Business Functions #### 1 General Management - General management must create a vision and mission for the business, and ensure these are achieved through goals and objectives. - Effective planning, organising, activating, leading, directing and controlling of resources and functions is necessary. - If these tasks are too much for one person, they can be delegated to other members of staff. #### 1.1 Levels of Management ##### Top-Level Managers **Responsibilities:** - Plan the future by setting goals, objectives - Make long-term strategic (what the business will do and why) decisions. **Alignment between levels:** - Holds the most authority and communicates instructions to middle-level managers. **Examples of organisational positioning:** - Chief Executive Officer (CEO), Chairperson of the Board, Managing Director (MD) ##### Middle-Level Managers **Responsibilities:** - Also called functional level managers, responsible for functions. - Make medium-term tactical (how the business will carry out strategic decisions) decisions - Turn tactical decisions into action. - Monitor activities in departments to give suggestions and feedback. **Alignment between levels:** - Second level of authority; interprets instructions of top-level managers and communicates instructions to lower-level managers. **Examples of organisational positioning:** - Marketing Manager, Production Manager, Financial Manager, Human Resource Manager ##### Lower-Level Managers **Responsibilities:** - Responsible for smaller work areas, more specialised for teams of workers - Implement objectives of middle-level by making routine decisions and day-to-day activities - Short-term planning, setting individual objectives for workers, allocating tasks on a daily basis - Feedback to middle management. **Alignment between levels:** - Interprets instructions of middle-level managers to activate strategic planning of top-level managers and tactical planning of middle-level managers. **Examples of organisational positioning:** - Foreman in production department, supervisor in sales department #### 1.2 Management Tasks ##### 1.2.1 Planning - Process in which a manager considers future, sets goals and objectives. - Decides how to carry out activities in business to achieve goals and objectives. ##### 1.2.2 Organising - Organising is the process of: - Looking at what needs to be done - Organising resources (including people) in such a way that you meet your goals and objectives. - Organising the jobs within specific functions or departments. ##### 1.2.3 Leading - The process of leading is to guide, motivate and inspire others. - A leader provides people with direction. - A leader activates workers and inspires them to take action and to do their jobs well. - Leaders must set up proper communication channels. ##### 1.2.4 Control - Control is about making sure (checking) that activities are carried out according to plan. - This is done through careful observation and by asking people for feedback. - Management must investigate reasons for failure. #### 2 Administration Responsible for all tasks and activities in the office such as: - Handling of information - Management of information - Office practice and information technology. ##### 2.1 Handling Information - Collect data - Process data into information - Store information. ##### 2.2 Management of Information - Information needs to be updated regularly, be correct, and complete. The following information would be important for decision-making: - Accounting records (financial statements) - Budgets (estimated income and estimated expenses) - Statistics (trends and calculations such as arithmetic mean, frequency distribution, mode, median, range) - Cost accounting (calculating how much it costs to make a product, keeping in mind the raw-materials, labour and other costs involved) ##### 2.3 Office practice and information technology - Office practice includes: - Handling of mail - Copying documents - Filing - Network system. Management will decide how to organize administration: - **Centralized:** Carried out in ONE office - **Decentralized:** Carried out in many places such as marketing department and human resource department. The choice to centralise or decentralise depends on: - Type and size of business - Quality of staff - Where the functions are carried out. ##### 2.3.2 Information Technology - Information technology includes the use of computers to create, store and communicate information. - The advantages of information technology include: - Improved communication in the business amongst departments - Improved communication with customers, suppliers and other external stakeholders - Automatic capturing and processing of data through programmes such as PASTEL, QUICKBOOKS, OMNI-ACCOUNTS. #### 3 Financing - Financial activities include: - Planning how much money is needed - Obtaining money - Managing money in all departments - Planning and overseeing investments. #### 3.1 Types and Sources of Financing ##### 3.1.1 Own Funds - Money that owners supply as capital, or profit from operations - The number of owners who contribute depends on the form of ownership - No interest to be paid ##### 3.1.2 Borrowed Funds - Borrowed money is debt - Can borrow from individuals, financial institutions, buy on credit - Can be long-term or short-term - Interest needs to be paid #### 3.2 Sources of Financing ##### 3.2.1 Sources of Own Funds: - Personal savings - Retained profits - Selling of assets ##### 3.2.2 Sources of Borrowed Funds - Friends and family - Term loans - Bank overdrafts - Trade credit - Instalment sale - Lease - Debentures #### 3.3 Budgeting - A budget is a written document showing planned income and estimated expenses for a specific period of time. This can be: - Short-term (one month to less than a year) - Medium-term (a year) - Long-term (a number of years).