Business Study PDF

For refresh: LL= limited liability Part 1: The 9 Sections Section 1- Basics of Business Key definitions: Business- A business refers to an organization or corporation that involves personal, commercial or industrial activities - 6 different types of businesses (will get into later) - Can operate i...

For refresh: LL= limited liability Part 1: The 9 Sections Section 1- Basics of Business Key definitions: Business- A business refers to an organization or corporation that involves personal, commercial or industrial activities - 6 different types of businesses (will get into later) - Can operate in many different industries - Should meet customer needs, make profits and be organized Limited liability and Limited liability protection -​ Limited liability (protection) means that if something goes wrong in a business a person will only lose what they have invested in the business and nothing more/none of their personal assets Goods and services - Goods are items that are physically sold to a consumer by a retailer. When someone purchases a good, the ownership transfers from the retailer to them - Services on the other hand are something performed to you by either one person or a group of people. When someone gives you a service, you do not own it and services are usually one time things Profit vs Non-profit A profit organization, as said in the name, is created to make a profit by selling a good or service to consumers/ - Profit organizations have to pay taxes A non profit organization is created to help out the community. Profits are NEVER passed through owners and they must follow strict guidelines to maintain such status. They usually are charities or environmental efforts like team trees. They do not have to pay taxes. Types of businesses red= cons 1.​ Sole Proprietorship -​ Business owned and operated by one person -​ Cheaper startup, full control -​ Owner has full liability, meaning if there is debt or legal trouble the owner has to pay all meaning assets are at risk 2.​ Partnership -​ Business owned by 2 or more people who share responsibility for business -​ Different types like General Partnership (GP), Limited Partnership (LP), Limited Liability Partnership (LLP) -​ Easy to start up and shared resources/responsibility -​ Example: Procter and gamble was a partnership -​ Potential for conflict and personal liability -​ GP: All partners have unlimited liability, shared equally among partners and usually a simple business -​ LP: Partners have limited liability, shared but flexible and used for professional firms -​ LLP: A partnership that has general partners and limited partner -​ General partners have unlimited liability but limited partners have limited liability, general partners manage and limited partners are passive investors, and used for investment and real estate 3.​ Corporation (C Corp) -​ Entity separate from owners which provides limited liability protection -​ Owners (Shareholders) not at risk for personal liability since they can raise funds by selling funds and have limited liability -​ Complex to set up and possible taxation at both personal and corporate levels -​ Example: Walmart, specializes in selling a variety of goods and services 4.​ Corporation (S Corp) -​ Special type of corporation with specific tax benefits, profits and losses pass through owners tax returns meaning they avoid double taxation -​ Limited liability for shareholders, no double taxation -​ Limited to 100 shareholders, only 1 class of stock meaning all shares have the same economic value -​ Example can be a law firm, since they can reap tax 5.​ Limited liability Company -​ Combines liability protection from c corp with tax efficiencies from a partnership -​ Flexible, granted LL and pass through tax -​ Pass through tax is when the profits/losses are passed to the owners meaning the business isn't taxed but instead it is induced at a personal level -​ Rules vary by area with higher fees than sole proprietor and partnership -​ Example may be Amazon 6.​ Franchise -​ Business that licenses name and model to support a franchisee Key terms for this type of business: -​ Franchisee is a person or company that holds a franchise for sale of goods -​ Franchisor sells the right and licensing to someone to sell products using their brand -​ Royalties:A sum of money exchanged for a patent -​ Example is KFC -​ High fees and limited freedom 7.​ Cooperative -​ Operated by group of people with shared interests such as coworkers, customers -​ Shared decision making, profit distribution and strong support -​ Limited funding, room for conflict and long decision making since it is owned by many people -​ Can be farmers or marketing businesses  Roles of businesses Local- Businesses provide jobs, helping the community with a wide range of options. They also generate revenue and create innovative technology Global: Play a key role in addressing issues, support types of infrastructure like the vehicle one, facilitate trade and help globalization since they rely on interconnected supply chains Characteristics of a successful business: 1.​ Customer Service: A successful business puts emphasis on customer service as it is a key part of a business. Customer service means being able to satisfy customers and build good relationships with them. 2.​ Innovation: Businesses should always lead the way with new and innovative ideas to differentiate themselves in the market like how Apple did with the Iphone, Ipad and Ipod. 3.​ Flexibility: A good business should have flexibility and understand when to adapt if the business is not succeeding. For example, netflix used to be a dvd rental and now they are a streaming service which proved to be a good idea. Section 2- Entrepreneurship What is an entrepreneur? The definition of an entrepreneur is nothing short of subjective. However, most are similar and an example of a possible definition is :A person who organizes/manages a business, usually with initiative and risk Key vocabulary: Entrepreneur: A person who exploits labor and capital to create goods and services to generate revenue Innovation: Changing the market by trying something new or creating a new idea Risk taking: Trying a new idea with the risk of failure but also success. Can be things like: -​ Changing a business completely -​ Trying a new career Start-up: When a company first opens Venture capital: A type of financing for a small business with high long term potential Angel investor: A type of investor, usually wealthy, who takes a portion of your business in return for s take in it. Sort of like a shark from shark tank Asset= Things a business owns like vehicles and buildings -​ Personal assets are assets of an individual, in this case likely involved in a business Break even= amount ($) in sales a business needs to make to cover startup costs. In other terms, how much a business needs to reach $0 in profit after being in ‘debt’ from starting up Business model: How a business operates and how it catches profit and value from others Cashflow: Money flowing in and out of a business Enterprise: another word for a business Marketing: Things a business does to attract customers Net profit: The amount of money made subtracted by the amount of costs Niche: A small, specific target audience Resources: Money, time and people needed to run a business Turnover: A business yearly amount of sales income Unique Selling point: What a business does differently to differentiate itself in the market Characteristics of an entrepreneur 1.​ Curiosity: Successful entrepreneurs always ask questions in order to gain new ideas. Structured experimentation is when entrepreneurs go through a detailed process to see if an idea is good or not. 2.​ Adaptability- Entrepreneurs should know how to change 3.​ Decisiveness- Ability to make good and important decisions 4.​ Self-Awareness: Being aware of their strengths and weaknesses. Keeping a growth mindset 5.​ Risk tolerance. Should know about risk and reward and balance them 6.​ Comfortable with failure: They should not fold under failure 7.​ Persistence: See failure as a new opportunity 8.​ Innovative thinking: Successful entrepreneurs have improved their goods to meet the markets needs 9.​ Dedication/Long Term Focus: Both mean each other. This is important because having no drive will cause you to lose motivation and have a fixed mindset. 10.​Strategic thinking: Enables them to identify S.W.O.T 11.​Communication: Good collaboration with team 12.​Accounting: Help manage finances De Bono's Hats -​ Different colored hats each with unique themes to encourage people to use different mindsets and be creative -​ Helps people think and discuss -​ The six hats are: White Hat = Facts(information and date, objective, what do I know?) Red Hat - intuitive hat, focuses on emotions and instincts Black Hat = cautious hat, uses critical thinking Yellow Hat = benefits, optimisation, positives with logical reasoning Green Hat = creativity, ideas and possibilities Blue Hat = process hat, planning for action, thinking about thinking Challenges of an entrepreneur -​ Keeping up with trends: Customer trends change in business, and sometimes demand does along with it. -​ Inventory management- Managing your inventory can be hard especially if you have too much or too little of something -​ Competition: Having a good competition can damage scales. This causes you to need to stand out, which can also be quite difficult -​ Logistics and delivery: Having poor product condition, delivery delays, bad customer service and inaccurate orders all fall under this category and can lower your reputation -​ Sustainability: Not being sustainable can lead to trouble for the future, but becoming sustainable is also hard since it is a multi step and expensive process -​ Time management: Having bad time management is caused by having a lot of different things at once and being overwhelmed, causing you not to put in your full potential into specific areas -​ Team building/management: Forming a team can be hard -​ Financial challenges: There are many forms of financial issues, some include too much debt, unaccounted for expenses and possibly legal issues. Section 3- Financial Literacy Key Definitions​ Financial Literacy is the skills, knowledge ability and behaviour of one to perform financial Decisions TFSA, tax-free savings accounts allow you to earn compound interest (an efficient and classic way of storing money) Budgeting is a plan you make to decide how you will spend your money for the month, week or other predetermined amount of time Planning is deciding what to do, when to do it and who/how you are going to do it. Saving means to set aside a small portion of your money in order to accumulate a large amount of savings overtime, typically in a savings account or investing in a bond -​ A bond is when you give your money to your provider (AKA buy a bond). The provider (usually bank/government) will then spend the money. Overtime, you will receive interest and eventually will be paid back more than what you bought the bond for based on interest. Some buzz words -​ Credit and Debt -​ Credit score Budget example: Key terms for investment: -​ Types of investment (Stocks, bonds) -​ Investment and the risk of doing it -​ Understanding market indices - Market indices are tools that one can use to see if the market is doing well. They usually cover specific segments of the stock market. -​ Why invest -​ Interest -​ Consumer awareness -​ Fundamentals of financial responsibility Income and Expenses -​ Income is money you earn, expenses are things you must spend money on. -​ It is VERY important to balance your income and expenses since they work hand in hand. If you cannot afford your expenses, cut some of the unnecessary expenses out. Tips for spending: Prioritization, track your spending, cut unnecessary expenses, create a savings and take a portion of your paycheck every time you receive it Risks: Stress, lower credit score and debt Benefits Usage of money in emergency situations (savings fund), building credit history and new opportunities Credit management tips: -​ Pay on time -​ Keep credit utilization low -​ Look into basic investment -​ Avoid taking on a large amount of debt you can not suffice Stocks Stocks are buying shares of a company and the average growth historically is about 7-10% annually More important terms 1. Interest and the types of it -​ Interest is the cost of borrowing money or a reward for saving money -​ Can be either simple interest (interest based solely on the principal amount) or compound interest (interest based on the amount of money accumulated from past interest and the principal amount) -​ Formulas: -​ Simple: P×i×n where P is the principal amount, I is the interest rate and N is the amount of time -​ Compound:  - Interest can be based on many factors but the most common ones are credit score, loan type (if borrowing) and the market (in other words, depending on when) Savings interest Is defined as the amount of money earned in interest from savings. -​ Reinvesting with compound interest can expand your money more efficiently -​ In this case, higher interest rates are good Borrowing interest Is the amount of interest one has to pay after borrowing money. High interest rates are bad in this case since you pay more. Credit vs Debt Credit is the form of trust that allows one party to lend money to another party. Such a party has to repay it in the form of debt meaning debt is the amount of money an individual owes to whoever. Section 4- Marketing What is marketing? Marketing is strategies used by businesses to attract customers and grow their business. Key Vocabulary Marketing mix- A mix of factors to convince customers to buy 4 P’s- Price, Product, Place, Promotion 2 C’s- Consumers, competitors Branding- Creating a unique brand identity and name with slogans and messaging Target Audience- The group a business wants to cater to. Can be based on age, disabilities etc Niche Market- A specialized, small market with a unique target market SWOT- Analysation using Strengths, Weaknesses, Opportunities, Threats Social Media Marketing- Using social media as a marketing tool that is free and reaches a wide audience Influencers- People who promote or review brands on social media. Can be detrimental to a business reputation. An example would be Keith Lee, who does food reviews and has many times before damaged the reputation of a company solely because of his food review The 4 P’s Product: The product being sold Price: The price of the product (can use strategies like discount or premium pricing) Place: Where the product will be sold (online, in-person etc) Promotion: How a brand will promote such product How companies attract customers Example: Nike Nike keeps consistent branding with the swoosh and often sponsors famous athletes Social media Social media is bing since: - Companies can speak directly to consumers and take reviews - Influencers can create a zone of trust between the brand and consumers if they promote it Final Info ⚡🚘 🚀 SWOT Analysis example: Tesla Electric Vehicles 🛠 | Strengths | Strong brand, innovative technology, and eco-friendly focus. | 🌱 | Weaknesses | High prices, limited charging infrastructure. | | Opportunities | Rising demand for green vehicles, government incentives. | | Threats ️| Competition from automakers and new EV companies. ‘ Niche marketing is meeting unique consumer needs, such as gluten-free products or vegan products. Customer feedback - Can influence marketing, like how Netflix gives personalized recommendations - feedback does matter since it can grow customer satisfaction and help businesses innovate and remain competitive Section 5- Digital Literacy and E-Commerce Keywords E-commerce/electronic commerce: Buying and selling goods online Cybersecurity: The safety and protection of technology such as personal information Digital payments: The use of currency over the internet without the need of banking Supply chain: The stable flow of buying and selling like a real food chain Cloud computing: The moving of something from one place to another like a download or app Utilization of tools: Using the tools you have efficiently and effectively AI: Understanding AI can help you as an entrepreneur and consumer Pros of an online store -​ Running an online store is easier due to the tools that we have -​ Perfecting the look of a store is easier with the help of AI and coders -​ Easier customer service with the use of AI and text-bots on websites -​ Still allows for human-to-human interaction -​ Start-up costs are cheaper since you do not have to account for things like rent and interior design Cons of an online store -​ Potential for cyber attacks from competitors and really just anyone. These cyber attacks can steal information and ransom it -​ Shipping costs and possible delays -​ Higher expectations than the reality Conclusion -​ While it may be a risky decision to create a business solely online, it is definitely worth it to create a website since it is relatively cheap and has little negatives Example of an E-Commerce business  -​ Amazon is the biggest e-commerce business in the world Digital payment and banking- how it works The digital payment industry works by using digital networks to transfer money from place to place without the use of physical banking. Payment can range from credit/debit cards on things like apple wallet to external programs like paypal Digital banking means consumers have a higher ease-of-access to their funds and transactions and other types of digital currency like cryptocurrency. Artificial Intelligence Pros of using it -​ Easier decision making since AI is not clouded by personal bias and can have better skills than someones own intuition -​ More efficient work rates since AI can produce information faster than any human on Earth -​ Can be used to create innovation in the market by utilizing AI tools -​ Can be used to look through job applications and find promising candidates at a higher rate -​ More innovation using AI since it can create unique ideas that someone may not thing of -​ Improved monitoring since AI can take in hefty amounts of data at once Cons of using it -​ AI is very costly since it is a relatively new technology and not many corporations have ease of access to it -​ Machines infused with AI with eventually degrade since that is just a natural process -​ AI cannot be used for extremely important parts of a business since people there will lack experience which is key Section 6- Ethics and Corporate Social Responsibility Business Ethics are moral principles/standards that guide decision making Some principles are Honesty, Transparency, Fairness, accountability and respect Important things to know: Build good relationships and a good reputation, promote long term sustainability Examples: Avoiding corruption/bribery. Fair treatment and fair pricing CSR (Corporate Social Responsibility -​ Is the idea that businesses should use policies that make a positive impact Benefits of good CSR -​ Improves brand image+reputation -​ Better customer loyalty -​ Customers build trust with you -​ Reduces ecological footprint Examples -​ Reducing carbon emissions, supporting local communities, apply fair trade practices Sustainability  -​ Is to operate a business in a way that is environmentally friendly for the future Ethical practices -​ Deciding what is right/wrong, good/bad etc.. -​ Example is a doctor not sharing medical information of a patient and respecting privacy Ethics -​ Like having a set of rules to help guide you into doing what's wrong and whats right Morals -​ Being more honest and open with your consumers and staff -​ Reflecting on decisions in the past and improving based on them -​ Thinking about others Key Takeaways -​ Be more honest with consumers and staff, try to identify ethical issues, avoid clickbaiting or overpricing, take accountability, reduce ecological footprint Stakeholders -​ A stakeholder is a person or group of people who cares about a company's actions -​ Like consumers, staff or investors Transparency Transparency is being honest, open and telling the truth to stakeholders and is important to build good relationships Section 7- Decision making & Problem solving S.W.O.T (Remastered)  -​ A SWOT analysis is a simple yet powerful tool that people can and should use to assess their business. The S stands for Strengths, W for weaknesses O for opportunities and T for threats. Strengths are things your business does well. This can be good advertising, good products or even great customer service. For example, a local bakery may have a good reputation Weaknesses are things that a business needs to build on. Could be outdated technology for not having a good financial plan. For example, not having an online store in the new era of technology. Opportunities are possible areas in which your business can grow and usually follow a trend, like creating healthier food or a growing demand for electric cars (Tesla) Threats are things that can hurt your business. These can be competitors, lack in demand or market shifts. For example, within the modern-day. DVD rentals have shrunk greatly due to the rise of streaming services. Case study of a SWOT analysis A local cafe: Strengths: A local cafe may offer fresh coffee that has a unique taste from anywhere else Weakness(es): The cafe only has 1 location, meaning not a large number of people can be reached Opportunities: With the growing popularity of technology, the cafe could offer delivery and take-out Threats: A new Starbucks just opened up nearby and is hurting business since starbucks is a more well-known name In conclusion, SWOT is a tool that every business should use to grant a brief self evaluation Critical Thinking Critical thinking is the ability to think strongly and create decisions in a clear state of mind, avoiding personal bias. Bloom's taxonomy breaks it up into 6 levels: Remembering, understanding, applying, analysing, evaluating and creating Case study of bloom's taxonomy- Netflix Remembering- They looked at the rise of online streaming services and realized people want online streaming services Understanding:They realized change was needed Application: They switched to streaming services Analyzing: Studied competitors and knew what they did was right Evaluating: Ensured that their technology was sustainable for future growth Creating: Created original content since that's what people wanted Brainstorming Brainstorming is when you create lots of different ideas in a short amount of time. The point is to make sure you think freely and not go too deep on every idea. Mind Maps work well and they are when you put one word in the middle and build based on that one word. Problem solving Problem solving is very important. De Bono's hats are a way to help you problem solve and they are listed above in Section 2 Decision Trees Decision trees are a way to map out questions and answers to those questions. They usually start off on one singular question and expand, like a mind map How can entrepreneurs make decisions and adapt to change? -​ They can make decisions and adapt by monitoring the market, customer feedback and comparing with competitors who are doing well. -​ Adapting is important since it allows for entrepreneurs to build and expand based on what they are doing wrong and right. Entrepreneurs often pivot strategies, update products and explore new niches Section 8- Careers in business Key Vocabulary: -​ Resume -​ Entrepreneurship -​ Networking -​ Internships -​ Personal branding -​ Social media Definitions’ -​ Entrepreneurship refers to someone who independently starts up a business. These people use creative strategies to differentiate themselves in the marketplace and many skills are needed to become one. -​ Networking is meeting other people, building relationships for things like decision making and support -​ Resume is a document that highlights your skills, education and past life. Used for jobs -​ Personal branding is how you present yourself to other people whether its online or in person -​ Internships are short jobs that allow you to gain real world experience Careers in Business and Skills Needed Accountant Math ability, attention to detail, analytical, accounting software expertise Accountants assist businesses with tracking their money, developing budgets, and compiling financial reports. 📊Marketer Skills Needed: Creativity, communication skills, social media skills, and data analysis. Marketers pitch products or services, make ads, and analyze customer preferences to grow businesses. 💡Entrepreneur Skills Needed: Leadership, decision making, creativity, risk taking. Entrepreneurs are the people who turn their ideas into reality by building their own businesses and managing their life. 📈Business Analyst Skills Needed: Critical thinking, research, communication and problem solving They study data about a business to help companies make improved and smart Decisions. 󰰁Human Resources Manager Skills Needed: Organization, communication, empathy, and leadership. This includes recruitment, training and employee satisfaction. 💰 Financial Planner Skills Needed: Financial knowledge, organization skills, customer service skills, and problem solving. Create a plan for managing money is one of the jobs that helps the company and individuals are called Financial planners. 🛒Sales Representative Skills Needed: Persuasion, relationship building, and communication and goal setting. Sales representatives seek to sell goods or services to customers and build long term Relationships. 📋Management Consultant Skills Needed: Good judgement, analytical skills and also presentation skills as well as working well in groups. Management consultants provide businesses with advice as to how to overcome challenges and increased efficiencies Relationships and Reputation Building relationships is very important since it allows you to gain insight on things you never would have before and can lead to new opportunities. Reputation is also significant since it can change the way people view you. Having a good reputation can boost a business and having a bad one can damage a business Internships, education and career pathways These 3 are grouped since they work hand in hand. Internships provide hands-on experience and can be good for building relationships or getting a taste of the real world. They can help you explore what you want to do in life, discover new experiences and new pathways. Education is also key since a good education will qualify you and prepare you for a good job. In conclusion, internships and education are 2 key things in getting a good job and discovering your desired career Section 9- Globalization and International Business Key vocabulary Globalization- The idea of process of exchanging goods and services, information or ideas across borders and every country being connected Trade barriers- Government-placed restrictions on international trade. Can be tariffs, quotas, subsidies and embargoes -​ A tariff is a tax on imported goods designed to reduce the amount being imported and to generate tax revenue, a quota is an amount/limit of an imported product, a subsidy a sum of money granted by the government to aid a business and an embargo is the ban of a good, type of good or from a specific country Imports and exports Multinational Corporation (MNC)- A company that operates in multiple locations around the world. Same as an international Supply Chain management (SCM) is monitoring production of goods to find ways to improve Risks Globalization Key aspects of globalization: Economic integration: countries become more integrated and connected with each other Technological Advancements: Improvements in technology and communication have made international trade easier Cultural Exchange: Globalization helps spread ideas, culture and consumer preferences across borders Global supply chains: Countries get access to supply chains that they do not have creating complex supply chains Impact of globalization on businesses Expanded markets: Access to new customers and E-commerce is more functional since online businesses can sell around the world Increased competition: Competition is coming in from around the world, sourcing products becomes more complex due to the many countries Branding and marketing: Increased exposure in more countries and businesses can create a brand that tailors to many regions Challenges and risks Cultural misunderstanding: Not understanding local customers can unease customers and damage brand Economic Dependence: Relying on global supply chain can create big issues, especially if things like pandemics or political issues occur Environmental impact: Global transport has a big impact on the environment meaning businesses must lenient towards sustainability International Business An international business is a business that sells around the world but operates in 1 country, like apple. Key aspects of an international business: Cultural Awareness: Cultural differences are crucial for international business since respecting diverse cultures can attract a larger audience Cross-Border Operations: International business do cross-border operations to expand their reach globally and serve customers in a place with high demand Collaboration: The ability to collaborate with other businesses can be key to attract more customers How businesses adapt to new markets: Monitoring of market trends: Doing this will help grow your business and attract more customers. Analyzing market threats and trends can be crucial Consumer behaviors: Consumer behaviors are how people act and what people buy based on needs and preferences. Analyzing these is crucial in a new market since it enables companies to change their products to maximize consumer attraction Competitor Actions: A good business will always monitor competitors to see what they are doing well and what they are doing wrong. They monitor things like price changes, new products and market shifts to make sure that they stay ahead. Benefits and Challenges of global trade​ Benefits: Specialization and efficiency: Companies can focus and produce what they do best. They can also get cheaper materials from around the world Access to a variety of Goods and Services: This benefits consumers because they like to see new things and products from around the world. Also, Countries can share new technologies. Challenges Economic disparity and inequality: Trade can widen the gap between high and low skilled workers since some industries gain and some lose. Also, poor countries usually do not benefit and wealt hy ones do. Environmental degradation: Resource overuse is a big issue since it can cause pollution and deforestation. Also, shipping and production emits a lot of greenhouse gases like carbon. Local vs Global business strategies Local: Adaptation to local preferences (products and services are customized to suit the local target market), localized marketing and more focus on locally available resources Global: Standardization (products and services designed to reach a large global market), Economies of scale (by doing above, they reduce cost and improve efficiency) and Centralized control (centralized decision making to ensure consistency in multiple areas) Part 2: Our units Monetization: Earning money from your content or platform. Sponsorships: Getting paid by a company to promote their brand or products. Brand partnership: A collaboration between two brands to create and promote something together. Affiliate marketing: Earning a commission by promoting and selling another company’s products. Content creation: Making videos, blogs, posts, or other media to share with an audience. Ad revenue: Money earned from showing ads on your content or platform. Engagement rate: How much your audience interacts with your content, like likes or comments. Target audience: The group of people your content or product is made for. Brand identity: The unique style and image that represent a brand. Influencer marketing: Using social media influencers to promote products or brands. Unique selling point (USP): What makes your product or content stand out from others. Niche market: A small, specific audience with unique needs or interests. Analytics: Data that shows how your content or platform is performing. Audience retention: How well you keep viewers or users coming back to your content. (all ChatGPT in this section)