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Page 1 of 232  Table of Contents 1.1 Business Activity 3 1.2 Classi cation of Businesses 13 1.3 Enterprise, business growth and size 18...

Page 1 of 232  Table of Contents 1.1 Business Activity 3 1.2 Classi cation of Businesses 13 1.3 Enterprise, business growth and size 18 1.4 Types of Business Organisations 29 1.5 Business Objectives and Stakeholder Objectives 41 2.2 Organisation and Management 58 2.3 Recruitment, Selection and Training of Workers 75 2.4 Internal and External Communication 87 3.2 Market Research 107 3.3 Marketing Mix 117 3.4 Marketing Strategy 137 4.1 Production of Goods and Services 144 4.2 Costs, Scale of Production and Break-even Analysis 157 4.3 Achieving Quality Production 165 4.4 Location Decisions 170 5.2 Cash Flow Forecasting and Working Capital 190 5.3 Income Statements 199 5.4 Statement of Financial Position 204 5.5 Analysis of Accounts 209 6.1 Economic Issues 214 6.2 Environmental and Ethical Issues 221 Page 2 of 232 fi 1.1 Business Activity Page 3 of 232 The Economic Problem Need: a good or service essential for living. Due to being fundamental to human survival, they have a higher priority in resource allocation. Examples include water and food and shelter. Want: a good or service that people would like to have, but is not required for living. Examples include cars and watching movies. These enhance the quality of life but are strictly not necessary for survival. Wants are shaped by individual preferences and can vary widely. Scarcity is the basic economic problem. It is a situation that exists when there are unlimited wants and limited resources to produce the goods and services to satisfy those wants. For example, we have a limited amount of money but there are a lot of things we would like to buy, using the money. Because of scarcity, individuals, businesses, and governments must make choices about how to allocate resources among competing needs and wants. This leads to trade-o s and the need to prioritize certain uses of resources over others. Page 4 of 232 ff Opportunity cost Opportunity cost is the next best alternative forgone by choosing another item. Due to scarcity, people are often forced to make choices. When choices are made it leads to an opportunity cost. Opportunity cost highlights the trade-offs inherent in resource allocation decisions. It forces individuals, businesses, and governments to consider not only what they gain from their choices but also what they give up. SCARCITY → CHOICE → OPPORTUNITY COST Imagine you have $20 to spend on a Saturday afternoon, and you have two options for how to use that money: Option 1: You can go to the movies with your friends. The cost of a movie ticket is $10, and you'll have a great time. Option 2: You can buy a new video game that you've been wanting for a while. The video game costs $20. Page 5 of 232 In this scenario: If you choose Option 1 (going to the movies), the opportunity cost is the video game you didn't buy. You gave up the opportunity to have that new video game in exchange for a fun time at the movies. If you choose Option 2 (buying the video game), the opportunity cost is the movie experience with your friends. You gave up the chance to enjoy the movie with them in exchange for playing the new video game. Factors of Production Factors of Production are resources required to produce goods or services. These factors are essential for the creation of goods and services in an economy. They are classi ed into four categories. Land: the natural resources that can be obtained from nature. This includes minerals, forests, oil and gas. The reward for land is rent. Labour: the physical and mental e orts put in by the workers in the production process. The reward for labour is wage/salary. Page 6 of 232 ff fi  Capital: the nance, machinery and equipment needed for the production of goods and services. The reward for capital is interest received on the capital. Enterprise: the risk taking ability of the person who brings the other factors of production together to produce a good or service. The reward for enterprise is pro t from the business. The e cient combination and utilization of these factors of production are essential for business growth and the production of goods and services that meet the needs and wants of customers. Page 7 of 232 fi ffi fi  Specialization Specialization occurs when a person or organisation concentrates on a task at which they are best at. Instead of everyone doing every job, the tasks are divided among people who are skilled and ef cient at them. It can also involve narrowing down the range of products, services, or markets that a business serves to become exceptionally skilled and competitive in that particular product/ area, Advantages: Workers are trained to do a particular task and specialise in this, thus increasing ef ciency Saves time and energy: production is faster by specialising Quicker to train labourers: workers only concentrate on a task, they do not have to be trained in all aspects of the production process Skill development: workers can develop their skills as they do the same tasks repeatedly, mastering it. Allows a business to develop deep expertise which can lead to a competitive advantage, as the company becomes known for its excellence in that particular area. Becoming a specialist in a particular eld can enhance a company's brand reputation. Page 8 of 232 fi fi fi  Specialization allows a business to focus on what it does best and reduce exposure to areas where it may not excel, which helps in mitigating risk. Disadvantages It can get monotonous/boring for workers, doing the same tasks repeatedly. Higher labour turnover as the workers may demand for higher salaries and company is unable to keep up with their demands. Over-dependency: if worker(s) responsible for a particular task is absent, the entire production process may halt since nobody else may be able to do the task. Vulnerability of a business may be higherto changes in the specialized market. Dif culties in diversifying if market conditions change for eg. consumer preferences, economic uctuations, technology advancements etc. Purpose of Business Activity Businesses attempt to solve the problem of scarcity, using scarce resources, to produce and sell those goods and services that consumers need and want, and also employ people as workers and pay them wages. Whatever their size and whoever owns them, all businesses have one thing in common- they combine factors of production to make products which satisfy people’s wants. Some examples of the purpose of existence of a business: Pro t generation Meeting customer needs Inovation Job creation Economic growth CSR Adaptation to change Page 9 of 232 fi fi fl  Added Value Added value is the difference between the cost of materials bought in and the selling price of the product. Which is, the amount of value the business has added to the raw materials by turning it into nished products. Every business wants to add value to their products so they may charge a higher price for their products and gain more pro ts. Example: Imagine you're at an ice cream parlor. They not only serve delicious ice cream but also offer a "Create Your Own Sundae" experience. This customization is the added value. While basic ice cream is delightful, the option to personalize it with a wide range of toppings creates an extra layer of enjoyment. It transforms a simple scoop into a unique, tailored dessert experience, making your visit memorable and special. This added value encourages customers to return, knowing they can have their ice cream just the way they like it. How to increase added value? Reducing the cost of production. Added value of a product is its price less the cost of production. Reducing cost of production will increase the added value. Raising prices. By increasing prices they can raise added value, in the same way as described above. Page 10 of 232 fi fi Problems may occur from both these measures; To lower cost of production, cheap labour, raw materials etc. may have to be employed, which will create poor quality products and only lowers the value of the product. And when prices are raised, the high price may result in customer loss, as they will turn to cheaper products. A business can add value by: Branding Adding special features Provide premium services etc. Customisation Sustainability and ethics Warranty and guarantees Exclusivity Aesthetics and design Example: how would you add value to a jewellery store? Design an attractive package to put the jewellery items in. An attractive shop-window-display. Well-dressed and knowledgeable shop assistants. Page 11 of 232. Page 12 of 232  1.2 Classi cation of Businesses Page 13 of 232 fi Primary, Secondary and Tertiary Sector Businesses can be classi ed into three sectors: Primary sector: this involves the use/extraction of natural resources. Examples include agricultural activities, mining, shing, wood-cutting, oil drilling etc. This sector is highly dependent on natural resources and is typically labor-intensive. It forms the foundation for all other sectors, as it provides the basic materials needed for production. Secondary sector: this involves the manufacture of goods using the resources from the primary sector. Examples include auto-mobile manufacturing, steel industries, cloth production etc. This sector involves transforming raw materials into tangible goods. It requires more capital investment and technology than the primary sector. Tertiary sector: this consist of all the services provided in an economy. This includes hotels, travel agencies, hair salons, banks etc. The tertiary sector comprises of intangible services rather than physical products. It is labor-intensive and driven by customer demand. Page 14 of 232 fi fi  Industrialisation and De-Industrailisation Industrialization: Industrialization is a process where a country or region shifts from an economy primarily based on agriculture and handcrafted goods to one focused on factories and machines. It involves the growth of industries like manufacturing and technology. During industrialization, there's increase in the production of goods, which leads to economic growth and urbanization. People move from rural areas to cities to work in factories, and this transition is called urbanization. Industrialization is a key driver of economic development and marks a country's transition into a more advanced economy. Deindustrialization: Deindustrialization is the opposite process, where a country or region experiences a decline in its industrial activities. This can happen for various reasons, such as increased automation, foreign competition, or changes in consumer preferences. When deindustrialization occurs, factories close, leading to job losses in the manufacturing sector. This shift can have economic and social impacts, including rising unemployment in affected areas and a shift towards a service-based economy, where more jobs are in elds like nance, healthcare, and education. Page 15 of 232 fi fi Private and Public Sector Private sector: where private individuals own and run business ventures. Their aim is to make a pro t, and all costs and risks of the business is undertaken by the individual. Examples, Nike, McDonald’s, Virgin Airlines etc. Ownership: The private sector consists of organizations, businesses, and enterprises that are owned and operated by private individuals or groups. These include sole proprietorships, partnerships, corporations, and other forms of private ownership. Purpose: The primary purpose of the private sector is to generate pro t and create wealth for owners and shareholders. It is driven by market forces and competition, seeking to maximize pro ts and ef ciency. Operations: Private sector organizations engage in a wide range of economic activities, including manufacturing, retail, services, technology, nance, and more. Decision-Making: Decision-making in the private sector is based on market demand, consumer preferences, and pro t incentives. Businesses make their own business decisions and strategies. Funding: Private sector entities raise capital through various means, including equity investments, loans, and venture capital. They attract investors and stakeholders to fund their operations and expansion. Accountability: Private sector organizations are accountable to their owners, shareholders, and customers. They are subject to market competition and consumer choices. Page 16 of 232 fi fi fi fi fi fi Public sector is where the government owns and runs business ventures. Their aim is to provide essential public goods and services (schools, hospitals, police etc.) in order to increase the welfare of their citizens, they don’t work to earn a pro t. It is funded by the taxpaying citizens’ money, so they work in the interest of these citizens to provide them with services. Ownership: The public sector includes government-owned and operated organizations and agencies at various levels of government (local, regional, national). These organizations are funded by taxpayers and are responsible for providing public goods and services. Purpose: The primary purpose of the public sector is to serve the public interest and provide essential services that may not be adequately provided by the private sector alone. These services include education, healthcare, infrastructure, defense, law enforcement, and more. Operations: Public sector organizations carry out activities that bene t society as a whole. These include policymaking, regulation, public administration, and direct service provision. Decision-Making: Decision-making in the public sector is in uenced by government policies, regulations, and budgetary constraints being subject to political processes, public input, and transparency requirements. Funding: The public sector is funded through taxes, government appropriations, and other public revenues. Government agencies do not seek pro t but aim to allocate resources for the common good. Accountability: Public sector organizations are accountable to elected of cials, government agencies, and the public. In a mixed economy, both the public and private sector exists. Page 17 of 232 fl fi fi fi fi 1.3 Enterprise, business growth and size Page 18 of 232  Entrepreneurship An entrepreneur is a person who organizes, operates and takes risks for a new business venture. The entrepreneur brings together the various factors of production to produce goods or services. Risk taker : Entrepreneurs are willing to take calculated risks, including nancial, personal, and professional risks, to pursue their business ideas. Creative: Successful entrepreneurs create value for their customers, clients, and society as a whole aiming to solve problems, meet needs, or provide opportunities for improvement. Optimistic : Optimistic entrepreneurs are more resilient and better equipped to navigate the uncertainties and obstacles that come with starting and running a business. Self-con dent : Self-con dent entrepreneurs are more likely to take initiative, make tough decisions, and handle criticism which can help them convince others, such as investors and partners, to believe in their vision and ideas. Innovative: Entrepreneurship often involves introducing new products, services, processes, or business models to the market. Independent: Entrepreneurship typically entails starting and owning a business, which provides a level of independence and control over one's professional life. Effective communicator: Effective communicators can articulate their business concepts, goals, and plans to various stakeholders, including employees, customers, investors, and partners. Hard working: Hardworking entrepreneurs are willing to put in the necessary work, whether it's developing their product or service, building their brand, or scaling their business. Page 19 of 232 fi fi fi  Business plan A business plan is a document containing the business objectives and important details about the operations, nance and owners of the new business. It provides a complete description of a business and its plans for the rst few years; explains what the business does, who will buy the product or service and why; provides nancial forecasts demonstrating overall viability; indicates the nance available and explains the nancial requirements to start and operate the business. Some of the content of a regular business plan are: Executive summary: brief summary of the key features of the business and the business plan. The owner: educational background and what any previous experience in doing previously. Page 20 of 232 fi fi fi fi fi  The business: name and address of the business and detailed description of the product or service being produced and sold; how and where it will be produced, who is likely to buy it, and in what quantities The market: describe the market research that has been carried out, what it has revealed and details of prospective customers and competitors Advertising and promotion: how the business will be advertised to potential customers and details of estimated costs of marketing Premises and equipment: details of planning regulations, costs of premises and the need for equipment and buildings Business organisation: whether the enterprise will take the form of sole trader, partnership, company or cooperative Costs: indication of the cost of producing the product or service, the prices it proposes to charge for the products Finance: how much of the capital will come from savings and how much will come from borrowings Cash ow: forecast income (revenue) and outgoings (expenditures) over the rst year Expansion: brief explanation of future plans Bene ts of making a business plan: Making a business plan before actually starting the business can be very helpful. By documenting the various details about the business, the owners will nd it much easier to run it. There is a lesser chance of losing sight of the mission and vision of the business as the objectives have been written down. Moreover, having the objectives of the business set down clearly will help motivate the employees. A new entrepreneur will nd it easier to get a loan or overdraft from the bank if they have a business plan. Government support for business startups A startup is a company typically in the early stages of its development. These entrepreneurial ventures are typically started by 1-3 founders who focus on capitalizing upon a perceived market demand by developing a viable product, service, or platform. Page 21 of 232 fi fl fi fi fi  Why do governments want to help new start-ups? They provide employment to a lot of people They contribute to the growth of the economy They can also, if they grow to be successful, contribute to the exports of the country. Start-ups often introduce fresh ideas and technologies into business and industry They encourage entrepreneurship. How do governments support businesses? They provide business advice to potential entrepreneurs, giving them information useful in staring a venture, including legal and bureaucratic ones They provide low cost premises such as land at low cost or low rent for new rms They provide loans at low interest rates. They give grants for capital: provide nancial aid to new rms for investment They give grants for training: provide nancial aid for workforce training They give tax breaks/ holidays: high taxes are a disincentive for new rms to set up. Governments can thus withdraw or lower taxation for new rms for a certain period of time. Measuring business size Businesses come in many sizes. They can be owned by a single individual or have up to 50 shareholders. Business size can be measured in the following ways: Number of employees: larger rms have larger workforce employed Value of output: larger rms are likely to produce more than smaller ones Value of capital employed: larger businesses are likely to employ much more capital than smaller ones Measuring revenue: larger rms with lower cost of production will have higher pro ts. Market share: business with the largest portion of total market sales or revenue holds the higher market share in its industry or market segment. Page 22 of 232 fi fi fi fi fi fi fi fi fi fi Business growth Businesses want to grow because growth helps reduce their average costs in the long-run, help develop increased market share, and helps them produce and sell to them to new markets. There are two ways in which a business can grow- internally and externally. Internal growth This occurs when a business expands its existing operations. For example, when a fast food chain opens a new branch in another country. This is a slow means of growth but easier to manage than external growth. Internal growth relies on the company's existing resources, capabilities, and operations to generate additional revenue and expand its market presence. It often involves gradual and controlled expansion, allowing the company to maintain a strong focus on its core business operations. Internal growth is typically considered lower risk compared to external growth strategies, as it doesn't involve many nancial commitments or integration challenges. Page 23 of 232 fi  Methods of Internal growth: Market Penetration: Increasing market share in existing markets by selling more to existing customers or targeting new customers within the same market. Product Development: Creating and launching new products or services to meet the needs of existing customers or to enter new market segments. Market Development: Expanding into new geographic regions or territories with existing products or services. Diversi cation: Expanding into unrelated industries or markets using the company's existing capabilities. Advantages: More control over the growth process. Lower nancial risk. Focuses on leveraging existing strengths and resources. Can lead to sustainable, long-term growth. External growth This is when a business takes over or merges with another business. It is sometimes called integration as one rm is ‘integrated’ into the other. Methods of external growth: Merger: A merger is when the owner of two businesses agree to join their rms together to make one business. Takeover: A takeover occurs when one business buys out the owners of another business , which then becomes a part of the ‘predator’ business. External growth can largely be classi ed into three types: Horizontal merger/integration: This is when one rm merges with or takes over another one in the same industry at the same stage of production. For example, when a rm that manufactures furniture merges with another rm that also manufacturers furniture. Page 24 of 232 fi fi fi fi fi fi fi fi  Bene ts: Reduces number of competitors in the market, since two rms become one. Opportunities of economies of scale. Merging will allow the businesses to have a bigger share of the total market. Vertical merger/integration: This is when one rm merges with or takes over another rm in the same industry but at a different stage of production. Therefore, vertical integration can be of two types: - Backward vertical integration: When one rm merges with or takes over another rm in the same industry but at a stage of production that is behind the ‘predator’ rm. For example, when a rm that manufactures furniture merges with a rm that supplies wood for manufacturing furniture. Bene ts: Merger gives assured supply of essential components. The pro t margin of the supplying rm is now absorbed by the expanded rm. The supplying rm can be prevented from supplying to competitors. - Forward vertical integration: When one rm merges with or takes over another rm in the same industry but at a stage of production that is ahead of the ‘predator’ rm. For example, when a rm that manufactures furniture merges with a furniture retail store. - Bene ts: Merger gives assured outlet for their product. The pro t margin of the retailer is now absorbed by the expanded rm. The retailer can be prevented from selling the goods of competitors. Conglomerate merger/integration: This is when one rm merges with or takes over a rm in a completely different industry. This is also known as ‘diversi cation’. For example, when a rm that manufactures furniture merges with a rm that produces clothing. Bene ts: Conglomerate integration allows businesses to have activities in more than one country. This allows the rms to spread its risks. There could be a transfer of ideas between the two businesses even though they are in different industries. This transfer of ideas could help improve the quality and demand for the two products. Page 25 of 232 fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi fi  Bene ts of growth: Faster market expansion. Access to new markets, technologies, and resources. Synergies and economies of scale can be achieved through acquisitions. Opportunities for diversi cation and risk mitigation. Drawbacks of growth: As a business grows, the business organisation in terms of departments and divisions will grow, along with the number of employees, making it harder to control, co-ordinate and communicate with everyone Growth requires a lot of capital which leads to lack of funds. Growth will require people with expertise in the eld to manage and coordinate activities Diseconomies of scale occurs meaning average costs of a rm tends to increase as it grows beyond a point, reducing pro tability. Why businesses stay small Type of industry: some rms remain small due to the industry they operate in. Examples of these are hairdressers, car repairs, catering, etc, which give personal services and therefore cannot grow. Market size: if the rm operates in areas where the total number of customers is small, such as in rural areas, there is no need for the rm to grow and thus stays small. Owners’ objectives: not all owners want to increase the size of their rms and pro ts. Some of them prefer keeping their businesses small and having a personal contact with all of their employees and customers, having exibility in controlling and running the business, having more control over decision-making, and to keep it less stressful. Market Saturation: In some industries, the market may already be saturated with competitors so small businesses nd it challenging to compete against larger, more established players and therefore decide to stay small. Lack of Access to Capital: Small businesses, especially startups, may struggle to secure nancing for expansion. Limited Resources: Small businesses have limited nancial and human resources and lack the resources needed to support rapid expansion, such as additional staff, capital, or infrastructure. Page 26 of 232 fi fi fi fi fi fi fi fi fl fi fi fi fi fi  Why businesses fail Here are the reasons why: Poor management: the main reason is lack of experience and planning which could lead to bad decision making. For example, new entrepreneurs could make mistakes when choosing the location of the rm, the raw materials to be used for production, etc, all resulting in failure Over-expansion: this could lead to diseconomies of scale and greatly increase costs, if a rms expands too quickly or over their optimum level Failure to plan for change: the demands of customers keep changing with change in tastes and fashion. Due to this, rms must always be ready to change their products to meet the demand of their customers. Failure to do so could result in losing customers and loss. They also won’t be ready to quickly keep up with changes the competitors are making, and changes in laws and regulations. Poor nancial management: if the owner of the rm does not manage his nances properly, it could result in cash shortages. This will mean that the employees cannot be paid and enough goods cannot be produced. Poor cash ow can therefore also cause businesses to fail. Inadequate capital: Starting or running a business with insuf cient capital can leave the business vulnerable to unexpected expenses, market uctuations, and slow growth. Ineffective marketing: Businesses that fail to effectively market their products or services may struggle to attract and retain customers, even if their offerings are of high quality. Page 27 of 232 fi fi fi fi fi fl fl fi fi  Why new businesses are at a greater risk of failure Less experience: a lack of experience in the market or in business gets a lot of rms easily pushed out of the market. New to the market: unable to understand the nuances and trends of the market, that existing competitors will have mastered. Don’t a lot of sales yet: only by increasing sales, can new rms grow and nd their foothold in the market. Don’t have a lot of money to support the business yet: nancial issues can quickly get the better of new rms if they aren’t very careful with their cash ows. It is only after they make considerable sales and start making a pro t, can they reinvest in the business and support it. In exibility: An unwillingness or inability to adapt to changing market conditions, customer preferences, or unexpected setbacks can hinder a new business's survival. Inadequate Risk Management: Failing to identify, assess, and mitigate risks can leave a new business vulnerable to unexpected challenges and disruptions. Poor planning: Inadequate business planning, including the absence of a clear business strategy, nancial planning and market research can lead to poor decision-making and resource allocation. Page 28 of 232 fi fl fi fi fi fi fi fl fi 1.4 Types of Business Organisations Page 29 of 232  Sole Trader/Sole Proprietorship A business organization owned and controlled by one person. Sole traders can employ other workers, but only he/she invests and owns the business. Advantages: Easy to set up: there are very few legal formalities involved in starting and running a sole proprietorship. A less amount of capital is enough by sole traders to start the business. There is no need to publish annual nancial accounts. Full control: the sole trader has full control over the decision making in the business. Sole trader receives all pro t: since there is only one owner, he/she will receive all of the pro ts the company generates. Personal: the owner can easily create and maintain contact with customers, which will increase customer loyalty to the business and also let the owner know about consumer wants and preferences. Flexibility: sole traders can adapt quickly to changing market conditions and make decisions without the need for consensus or approval from partners or shareholders. Page 30 of 232 fi fi fi  Tax Bene ts: in some regions, sole traders can bene t from certain tax advantages and deductions. Privacy: nancial and operational information is not disclosed to the public, offering a level of privacy. Disadvantages: Unlimited liability: if the business has bills/debts left unpaid, their personal property can be seized, if their investments don’t meet the unpaid amount. This is because the business and the investors are the legally not separate (unincorporated). Full responsibility: since there is only one owner, the sole owner has to undertake all running activities increasing workload for the individual. Lack of capital: the amount of capital invested in the business will be very low which can restrict growth and expansion of the business. Their only sources of nance will be personal savings or borrowing or bank loans (though banks will be reluctant to lend to sole traders since it is risky). Lack of continuity: If the owner dies or retires, the business dies with him/her. Workload: the owner is responsible for all tasks and responsibilities leading to long working hours and burnout. Limited Expertise: sole traders may lack expertise in certain areas, such as nance, marketing, or operations, leading to gaps in the business's management. Competitive Disadvantage: smaller size and fewer resources may put sole traders at a competitive disadvantage compared to larger businesses. Page 31 of 232 fi fi fi fi fi  Partnerships A partnership is a legal agreement between two or more (usually, up to twenty)people to own, nance and run a business jointly and to share all pro ts. Advantages: Easy to set up: Similar to sole traders, very few legal formalities are required to start a partnership business. A partnership agreement/ partnership deed is a legal document that all partners have to sign, which forms the partnership. There is no need to publish annual nancial accounts. Partners can provide new skills and ideas: The partners have skills and ideas that can be used by the business to improve business pro ts. More capital investments: Partners can invest more capital than what a sole trade only by himself could. Shared Responsibility: Partnerships allow for shared responsibility and decision- making, reducing the burden on individual partners. Tax Bene ts: Partnerships are not subject to income tax at the business level. Instead, pro ts are "passed through" to individual partners and taxed at their respective personal tax rates. Page 32 of 232 fi fi fi fi fi fi  Diverse Perspectives: Partnerships bene t from diverse perspectives and ideas, which lead to innovation and better decision-making. Disadvantages: Con icts: arguments may occur between partners while making decisions delaying decision-making. Unlimited liability: similar to sole traders, partners too have unlimited liability- their personal items are at risk if business goes bankrupt. Lack of capital: smaller capital investments as compared to large companies. No continuity: if an owner retires or dies, the business also dies with them. Shared Pro ts: Pro ts are shared among partners, which may not be favorable if one partner contributes signi cantly more to the business. Dif culty in Decision-Making: In larger partnerships, reaching a consensus on important decisions can be challenging and time-consuming. Liability for Partner Actions: Partners are held personally liable for the actions of other partners within the scope of the business. Limited companies (LLC) These companies can sell shares, unlike partnerships and sole traders, to raise capital. Other people can buy these shares (stocks) and become a shareholder (owner) of the company. Therefore they are jointly owned by the people who have bough it’s stocks. These shareholders then receive dividends (part of the pro t; a return on investment). The shareholders in companies have limited liabilities. That is, only their individual investments are at risk if the business fails or leaves debts. If the company owes money, it can be sued and taken to court, but it’s shareholders cannot. The companies have a separate legal identity from their owners, which is why the owners have a limited liability. These companies are incorporated. (When they’re unincorporated, shareholders have unlimited liability and don’t have a separate legal identity from their business). Page 33 of 232 fi fl fi fi fi fi fi  Companies also enjoys continuity, unlike partnerships and sole traders. That is, the business will continue even if one of it’s owners retire or die. Shareholders will elect a board of directors to manage and run the company in it’s day-to- day activities. In small companies, the shareholders with the highest percentage of shares invested are directors, but directors don’t have to be shareholders. The more shares a shareholder has, the more their voting power. Classi cation of Businesses Private Limited Companies: One or more owners who can sell its’ shares to only the people known by the existing shareholders (family and friends). Example: Ikea. Public Limited Companies: Two or more owners who can sell its’ shares to any individual/organization in the general public through stock exchanges Example: Verizon Communications. Advantages: Limited Liability because, the company and the shareholders have separate legal identities. Selling shares to other people (especially in Public Ltd. Co.s), raises a huge amount of capital, which is why companies are large. Public Ltd. Companies can advertise Page 34 of 232 fi  their shares, which tells interested individuals about the business, it’s activities, pro ts, board of directors, shares on sale, share prices etc attracting investors. A limited company is a separate legal entity from its owners (shareholders), which means it can own property, enter contracts, and sue or be sued in its own name. Operating as a limited company can enhance credibility with clients, customers, and partners, as it conveys a sense of stability and professionalism. Limited companies can provide attractive employee bene ts and stock options, helping attract and retain top talent. Disadvantages: Private limited companies are required by law to publish their nancial statements annually, while for public limited companies, it is legally compulsory to publish all accounts and reports. All the writing, printing and publishing of such details are very expensive, and competitors could use it to learn the company secrets. Private Limited Companies cannot sell shares to the public and they can only be sold to people they know with the agreement of other shareholders. This will raise lesser capital than Public Ltd. Companies. Public Ltd. Companies require a lot of legal documents and investigations before it can be listed on the stock exchange. Public and Private Limited Companies must also hold an Annual General Meeting (AGM), where all shareholders are informed about the performance of the company and company decisions, vote on strategic decisions and elect board of directors. This is very expensive to set up, especially if there are thousands of shareholders. Public Ltd. Companies may have managerial and communication problems since they are very large, they become very dif cult to manage which will slow down decision-making. In Public Ltd. Companies, the shareholders can lose control of the company when other large shareholders outvote them or when board of directors control company decisions. Running a limited company can be costlier due to ongoing compliance costs, such as audit fees and fees for legal and accounting services. Decision-making in larger corporations can be complex and slow due to the involvement of multiple stakeholders and hierarchical structures. Page 35 of 232 fi fi fi fi  Disputes among shareholders can negatively impact the company's operations and create legal challenges. Is that you? Take a break! Page 36 of 232  Franchises The owner of a business (the franchisor) grants a licence to another person or business (the franchisee) to use their business idea – often in a speci c geographical area. For example: McDonald’s and Subway having lots of franchises in different countries. ADVANTAGES DISADVANTAGES Rapid, low cost method of Pro ts from the franchise needs business expansion to be shared with the franchisee Gets and income from Loss of control over running of franchisee in the form of business franchise fees and royalties If one franchise fails, it can Franchisee will better TO affect the reputation of the entire understand the local tastes and FRANCHISOR brand so can advertise and sell appropriately Franchisee may not be as skilled Can access ideas and suggestions from franchisee Need to supply raw material/ product and provide support and Franchisee will run the training operations Cost of setting up business No full control over business- need to strictly follow An established brand and franchisor’s standards and rules trademark, so chance of business failing is low Pro ts have to be shared with TO Franchisor will give technical franchisor FRANCHISEE and managerial support Need to pay franchisor franchise Franchisor will supply the raw fees and royalties materials/products Need to advertise and promote the business in the region themselves Page 37 of 232 fi fi fi  Franchise systems are built on uniformity, and franchisees are expected to maintain consistent standards and quality across all locations. Franchise agreements have renewal terms, and the terms and conditions for renewal vary among franchisors. Franchisors are required to provide franchisees with an FDD, which contains important information about the franchise opportunity, including nancial performance data and legal disclosures. Franchisees should consider their exit strategy, as selling a franchise requires approval from the franchisor and has speci c terms. Some franchises allow existing independent businesses to convert to a franchise model, offering a transition path for entrepreneurs. Joint Ventures Joint venture is an agreement between two or more businesses to work together on a project. The foreign business will work with a domestic business in the same industry. Advantages: It reduces risks due to it being shared amongst the two businesses. Each business brings different expertise to the joint venture. The market potential for all the businesses in the joint venture is increased. Market and product knowledge can be shared to the bene t of the businesses. Page 38 of 232 fi fi fi  It bring together partners with complementary skills, knowledge, and capabilities, enhancing the chances of success. It can lead to cost savings through economies of scale and shared expenses. Disadvantages: Any mistakes made will re ect on all parties in the joint venture, which may damage their reputations. The decision-making process may be ineffective due to different business culture or different styles of leadership. Pro ts are shared among partners according to their ownership percentages, which may not align with each party's contribution. While risk sharing can be an advantage, it also means that partners are exposed to each other's risks, and the failure of one partner can impact the entire venture. Managing a JV can be complex, as it involves coordinating activities, resources, and interests of multiple parties. Public Sector Corporations Public sector corporations are businesses owned by the government and run by directors appointed by the government. They provide essentials services like water, electricity, health services etc. The government provides the capital to run these corporations in the form of subsidies (grants). Public corporations aim to: to keep prices low so everybody can afford the service. to keep people employed. to offer a service to the public everywhere. Advantages: Some businesses are considered too important to be owned by an individual. (electricity, water, airline). Natural monopolies, are controlled by the government. (electricity, water) It reduces waste in an industry. (e.g. two railway lines in one city) They rescue important businesses when they are failing through nationalisation It provide essential services to the people It provides access to government funding, grants, or subsidies, which can support their operations and investment in public infrastructure. Page 39 of 232 fi fl  It is more stable and less susceptible to market uctuations and economic downturns because they are funded by the government. It can engage in long-term planning and projects that may not be feasible for private companies due to their focus on pro tability. Drawbacks: Motivation might not be as high because pro t is not an objective. Subsidies lead to inef ciency making it unfair for private businesses. There is no competition to public corporations, so there is no incentive to improve. They can be burdened by bureaucracy, leading to inef ciencies, slow decision- making, and a lack of innovation. They may struggle with adapting to changing market conditions and technological advancements due to their rigid structures. Public sector corporations may have a monopoly or oligopoly position affecting competition and pricing. Page 40 of 232 fi fi fi fl fi 1.5 Business Objectives and Stakeholder Objectives Page 41 of 232 Business objectives Business objectives are the aims and targets that a business works towards to help it run successfully. Although the setting of these objectives does not always guarantee the business success, it has its bene ts. Setting objectives increases motivation as employees and managers have clear targets to work towards. Decision making is easier and less time consuming as there are set targets to base decisions on. i.e., decisions will be taken in order to achieve business objectives. Setting objectives reduces con icts and helps unite the business towards reaching the same goal. Business objectives provide a clear sense of direction and purpose for the organization, helping employees understand what needs to be achieved and where to focus their efforts. Objectives help organizations allocate resources effectively by prioritizing projects and initiatives that align with strategic goals. Business objectives facilitate communication within the organization by providing a common language and shared goals. Organizations can use objectives as benchmarks to compare their performance against industry standards or competitors. Meeting or exceeding objectives can boost stakeholder con dence, including investors, customers, and partners. Page 42 of 232 fl fi fi  Businesses in the private sector aim to achieve the following objectives: Survival: new or small rms and rms in a highly competitive market will be more concerned with survival rather than any other objective. To achieve this, they could decide to lower prices forsaking other objectives such as pro t maximization. Pro t: All rms have pro t making as a primary objective because pro ts are required for further investment into the business as well as for the payment of return to the shareholders/owners of the business. Growth: once a business has passed its survival stage it will aim for growth and expansion measured by value of sales or output. A larger business can ensure greater job security and salaries for employees and bene t from higher market share and economies of scale. Market share: this can be de ned as the proportion of total market sales achieved by one business. Increased market share can bring about increased customer loyalty, setting up of brand image, etc. Service to the society: social enterprises do not aim for pro ts and prefer to set more economical objectives. They aim to better the society by providing social, environmental and nancial aid. Page 43 of 232 fi fi fi fi fi fi fi fi fi fi fi Business objectives should be SMART (Speci c, Measurable, Achievable, Relevant, and Time-bound) to provide clear guidelines for progress tracking and evaluation. Regularly reviewing and adjusting objectives is essential to adapt to changing market conditions and organizational priorities. Stakeholders A stakeholder is any person or group that is interested in or directly affected by the performance or activities of a business. These stakeholder groups can be external – groups that are outside the business or they can be internal – those groups that work for or own the business. Page 44 of 232 fi Internal stakeholders: Shareholder/ Owners: They invest capital into the business to set up and expand it. These shareholders are liable to a share of the pro ts made by the business. Objectives: Shareholders are entitled to a rate of return on the capital they have invested into the business and will therefore have pro t maximization as an objective. Business growth will also be an important objective as this will ensure that the value of the shares will increase. Workers: these are the people that are employed by the business and are directly involved in its activities. Objectives: Regular payment for the work done by the employees. Workers will want to bene t from job satisfaction as well as motivation. The employees will want job security– the ability to be able to work without the fear of being dismissed or made redundant. Managers: they are also employees but managers control the work of other and making key business decisions. Objectives: Like regular employees, managers too will aim towards a secure job. Higher salaries due to their jobs requiring more skill and effort. Managers will also wish for business growth as a bigger business means that managers can control a bigger and well known business. Suppliers: A supplier is an individual that provides goods or services to another organization in exchange for payment or agreed-upon terms. Objectives: Establish mutually bene cial partnershipsand long-term relationships. Ensure timely payment and fair terms for goods and services. Collaborate on product quality and innovation. Page 45 of 232 fi fi fi fi External Stakeholders: Customers: They purchase and consume the goods and services that the business produces/ provides. Objectives: Price that re ects the quality of the good. The products must be reliable and safe. i.e., there must not be any false advertisement of the products. The products must be well designed and of a perceived quality. Government: the role of the government is to protect the workers and customers from the business’ activities and safeguard their interests. Objectives: The government will want the business to grow and survive as they help increase the total output of the country, improve employment and increase government revenue through payment of taxes. They will expect the rms to stay within the rules and regulations set by the government. Banks: these banks provide nancial help for the business’ operations’ Objectives: The banks will expect the business to be able to repay the amount that has been lent along with the interest on it. Community: this consists of all the stakeholder groups, especially the third parties that are affected by the business’ activities. Objectives: The business must offer jobs and employ local employees. The production process of the business must in no way harm the environment. Products must be socially responsible and not pose any harmful effects from consumption. Page 46 of 232 fl fi fi  Con icts of stakeholders’ objectives Pro t Maximisation vs. Employee Well-being: Shareholders or owners often seek to maximize pro ts, which may con ict with the goal of providing employees with higher wages and better working conditions. Balancing these objectives can be challenging. Customer Satisfaction vs. Cost Reduction: Customers may demand higher product quality and service levels, which can lead to increased costs. This con icts with the organization's objective to reduce costs and improve pro tability. Environmental Sustainability vs. Economic Growth: Environmental groups and regulators may push for sustainable practices that reduce environmental impact but may increase operating costs. This can clash with the organization's goal of economic growth and pro tability. Short-Term vs. Long-Term Objectives: Investors seeking quick returns may clash with management's desire to invest in long-term strategies that may take time to yield results. Employee Satisfaction vs. Shareholder Returns: A workforce demanding higher compensation, bene ts, and job security may con ict with shareholders' interests in maximizing returns on their investments. Page 47 of 232 fl fi fi fl fi fi fi fl fl Public- sector businesses Government owned and controlled businesses do not have the same objectives as those in the private sector. Objectives: Financial: although these businesses do not aim to maximize pro ts, they will have to meet the pro t target set by the government so that it can be reinvested into the business for meeting the needs of the society. Service: the main aim of this organization is to provide a service to the community that must meet the quality target set by the government Social: This can be by providing employment to citizens, providing good quality goods and services at an affordable rate, etc. Transparency and Accountability: Maintain high levels of transparency in nancial and administrative processes to build trust among citizens and stakeholders. Page 48 of 232 fi fi fi 2.1 Motivating Workers Page 49 of 232  Motivation Motivation is the reason why employees want to work hard and work effectively for the business. Why are people inclined to work? Have a better standard of living: by earning incomes they can satisfy their needs and wants Be secure: having a job means they can always maintain or grow that standard of living Gain experience and status: work allows people to get better at the job they do and earn a reputable status in society Have job satisfaction: people also work for the satisfaction of having a job. Why do rms go to the pain of making sure their workers are motivated? When workers are well-motivated, they become highly productive and effective in their work, become absent less often, and less likely to leave the job, thus increasing the rm’s ef ciency and output, leading to higher pro ts. For example, in the service sector, the employee must not be unhappy at work, he may act lazy and rude to customers, leading to low customer satisfaction, more complaints and ultimately a bad reputation and low pro ts. Page 50 of 232 fi fi fi fi fi  Motivation Theories Taylor’s Scienti c Management: Taylor based his ideas on the assumption that workers were motivated by personal gains, mainly money and that increasing pay would increase productivity (amount of output produced). Therefore he proposed the piece-rate system, whereby workers get paid for the number of output they produce. So in order, to gain more money, workers would produce more. He also suggested a scienti c management in production organisation, to break down labour (essentially division of labour) to maximise output. Taylor recommended that work be divided into smaller, specialized tasks to increase ef ciency. This specialization would enable workers to become highly skilled in their speci c roles.Taylor emphasized the importance of developing standardized work methods and procedures which aims to eliminate unnecessary variations in work processes and ensure consistent output. Criticism: There are various other motivators in the modern workplace, some even more important than money. The piece rate system is not very practical in situations where output cannot be measured (service industries) and also will lead to (high) output that doesn’t guarantee high quality. It has a mechanistic and de-humanizing approach to work and its potential for worker exploitation. Maslow’s Hierarchy: Maslow’s hierarchy of needs shows that employees are motivated by each level of the hierarchy going from bottom to top. Managers can identify which level their workers are on and then take the necessary action advance them onto the next level. Maslow's theory suggests that individuals are motivated to satisfy lower-level needs before progressing to higher-level ones. Page 51 of 232 fi fi fi fi  Criticism: Some argue that it oversimpli es human motivation and doesn't account for cultural and individual differences. Individuals may pursue higher-level needs even if lower-level needs are not completely satis ed. For some employees, for example, social needs aren’t important but they would be motivated by recognition and appreciation for their work from seniors. Herzberg’s Two-Factor Theory: Frederick Herzberg’s two-factor theory, wherein he states that people have two sets of needs: Basic needs called ‘hygiene factors’: security: The fear of losing one's job can be a source of stress and dissatisfaction. work conditions: A safe and comfortable work environment is essential. Poor working conditions, such as inadequate lighting, noisy surroundings, or uncomfortable workstations, can be sources of dissatisfaction. company policies and administration: Fair and consistent company policies and procedures are important. Inconsistent or unfair policies can lead to dissatisfaction. relationship with subordinates and superiors: Negative relationships with coworkers or superiors can contribute to dissatisfaction. salary: Employees expect fair compensation for their work. If salaries are perceived as low or unfair, it can lead to dissatisfaction. Page 52 of 232 fi fi  Needs that allow the human being to grow psychologically, called the ‘motivators’: achievement: The opportunity to achieve and accomplish challenging tasks and goals. recognition: Acknowledgment and appreciation for one's contributions and achievements. personal growth/development: Opportunities for personal and professional development work itself: Engaging and meaningful work that is interesting and provides a sense of purpose. Criticism: Hygiene factors don’t act as motivators as their effect quickly wear off. It oversimpli es the complex nature of motivation and job satisfaction. Motivating Factors Page 53 of 232 fi  Financial and non- nancial motivators are two categories of incentives and rewards used by organizations to motivate and engage their employees. These motivators boost morale, job satisfaction, and overall performance. Financial Motivators: are tangible rewards that have a monetary value and are provided as compensation or bene ts to employees. These rewards are often tied directly to an employee's nancial well-being. Commonly practiced nancial motivators include: Wages: often paid weekly. They can be calculated in two ways: Time-Rate: pay based on the number of hours worked. Although output may increase, it doesn’t mean that workers will work sincerely use the time to produce more- they may simply waste time on very few output since their pay is based only on how long they work. The productive and unproductive worker will get paid the same amount, irrespective of their output. Piece-Rate: pay based on the no. of output produced. Same as time-rate, this doesn’t ensure that quality output is produced. Thus, ef cient workers may feel demotivated as they’re getting the same pay as inef cient workers, despite their ef ciency. Salary: paid monthly or annually. Commission: paid to salesperson, based on a percentage of sales they’ve made. The higher the sales, the more the pay. Although this will encourage salespersons to sell more products and increase pro ts, it can be very stressful for them because no sales made means no pay at all. Bonus: additional amount paid to workers for good work Performance-related pay: paid based on performance. An appraisal (assessing the effectiveness of an employee by senior management through interviews, observations, comments from colleagues etc.) is used to measure this performance and a pay is given based on this. Pro t-sharing: a proportion of the company’s pro ts is distributed to workers providing workers incentive to work hard. Share ownership: shares in the rm are given to employees so that they can become part owners of the company. This will increase employees’ loyalty to the company, as they feel a sense of belonging. Page 54 of 232 fi fi fi fi fi fi fi fi fi fi fi Non-Financial Motivators: are intangible incentives that are not tied to monetary compensation but can in uence employee satisfaction and motivation. Common examples of non- nancial motivators include: Fringe bene ts: are non- nancial rewards given to employees - Company vehicle/car - Free healthcare - Children’s education fees paid for - Free accommodation - Free holidays/trips - Discounts on the rm’s products Job Satisfaction: the enjoyment derived from the feeling that you’ve done a good job. Employees have different ideas about what motivates them- it could be pay, promotional opportunities, team involvement, relationship with superiors, level of responsibility, chances for training, the working hours, status of the job etc. Responsibility, recognition and satisfaction are in particular very important. Work-Life Balance: Promoting a healthy work-life balance through exible work arrangements, remote work options, and family-friendly policies. Autonomy: Allowing employees to have a degree of independence and decision- making authority in their roles, which can enhance job satisfaction. Recognition and Appreciation: Providing employees with recognition for their contributions and achievements, which can boost self-esteem and job satisfaction. Some ways of providing non- nancial motivators are discussed below: Job Rotation: involves workers swapping around jobs and doing each speci c task for only a limited time and then changing round again. This increases the variety in the work itself and will also make it easier for managers to move around workers to do other jobs if somebody is ill or absent. The tasks themselves are not made more interesting, but the switching of tasks may avoid boredom among workers. Page 55 of 232 fi fi fl fi fi fi fl fi  Job Enlargement: where extra tasks of similar level of work are added to a worker’s job description. These extra tasks will not add greater responsibility or work for the employee, but make work more interesting. E.g.: a worker hired to stock shelves will now, as a result of job enlargement, arrange stock on shelves, label stock, fetch stock etc. Job Enrichment: involves adding tasks that require more skill and responsibility to a job. This gives employees a sense of trust from senior management and motivate them to carry out the extra tasks effectively. Some additional training may also be given to the employee to do so. E.g.: a receptionist employed to welcome customers will now, as a result of job enrichment, deal with telephone enquiries, word-process letters etc. Team-working: a group of workers is given responsibility for a particular process, product or development. They can decide as a team how to organize and carry out the tasks. The workers take part in decision making and take responsibility for the process. It gives them more control over their work and thus a sense of commitment, increasing job satisfaction. Working as a group will also add to morale, ful ll social needs and lead to job satisfaction. Opportunities for training: providing training will make workers feel that their work is being valued. Training also provides them opportunities for personal growth and development, thereby attaining job satisfaction. Opportunities of promotion: providing opportunities for promotion will get workers to work more ef ciently and ll them with a sense of self-actualisation and job satisfaction. Page 56 of 232 fi fi fi. Page 57 of 232 2.2 Organisation and Management Page 58 of 232 Organizational Structure Organizational structure refers to the levels of management and division of responsibilities within a business. Advantages: All employees are aware of which communication channel is used to reach them with messages. Everyone knows their position in the business, who they are accountable to and who they are accountable for. It shows the links and relationship between the different departments. Gives everyone a sense of belonging as they appear on the organizational chart. With clear reporting relationships, information and decisions ow more smoothly through the organization. Organizational structures often allow employees to specialize in speci c roles and functions, which can lead to increased expertise and ef ciency in those areas. As the company grows, new roles and departments can be added more easily, and reporting relationships can be adjusted accordingly. Decisions about resource allocation can be more strategic and aligned with organizational goals. Page 59 of 232 fi fl fi Span of Control The span of control is the number of subordinates working directly under a manager in the organizational structure. Narrow Span of Control (Tall Structure): A narrow span of control means that a manager or supervisor has a relatively small number of subordinates reporting directly to them. This results in a hierarchical or "tall" organizational structure with multiple levels of management. Narrow spans of control are typically associated with more intense supervision and closer manager-subordinate relationships. It can be well-suited for complex tasks, high-risk situations, or industries where close supervision is essential, such as healthcare or aviation. Advantages: Managers can provide more individualized attention and guidance to subordinates. In high-risk industries, narrow spans of control allow for tighter control and oversight. More management positions can provide opportunities for career advancement within the organisation. Disadvantages: Communication bottlenecks and delays. High management costs. Overlapping responsibilities and confusion. Organisational rigidity and bureaucracy. Limited employee autonomy. Page 60 of 232  Wide Span of Control (Flat Structure): A wide span of control means that a manager or supervisor has a larger number of subordinates reporting to them. This leads to a atter organizational structure with fewer layers of management. Wide spans of control have greater employee autonomy and reduced direct supervision. It can be effective in organizations where tasks are routine, employees are experienced and self-directed, and communication channels are ef cient. Advantages: Fewer managers can lead to cost savings in terms of salaries and overhead. Flatter structures often lead to quicker decision-making as there are fewer layers of approval. Employees may have more autonomy and responsibility, which can boost job satisfaction and motivation. Disadvantages: Limited individualized supervision. Risk of manager overwork and burnout. Coordination challenges in larger teams. Potential training and development limitations. Accountability issues in monitoring performance. Page 61 of 232 fl fi  Potential for power imbalances. Resource allocation challenges in larger teams. Chain of command The chain of command is the structure of an organization that allows instructions to be passed on from senior managers to lower levels of management. In the above gure, there is a short chain of command since there are only four levels of management shown. Point to note: The wider the span of control the shorter the chain of command since more people will appear horizontally aligned on the chart than vertically. A short span of control leads to long chain of command. Advantages of a short chain of command (disadvantages of a long chain of command): Communication is quicker and more accurate. Top managers are less remote from lower employees, so employees will be more motivated and top managers can always stay in touch with the employees. Spans of control will be wider meaning managers have more people to control. This is bene cial because it will encourage them to delegate responsibility (give work to subordinates) and so the subordinates will be more motivated and feel trusted. However there is the risk that managers may lose control over the tasks. Page 62 of 232 fi fi Disadvantages of a short chain of command (advantages of a long chain of command): Managers may struggle to provide individualized supervision. Managers can become overburdened, leading to burnout. Coordinating a large team becomes more complex. Power imbalances and workplace inequities may arise. Distributing resources may be less ef cient. Line Managers have authority over people directly below them in the organizational structure. Traditional marketing/operations/sales managers are good examples. Staff Managers are specialists who provide support, information and assistance to line managers. The IT department manager in most organisations act as staff managers. Page 63 of 232 fi Roles and Responsibilities Directors: Directors are typically members of the company's board of directors. They are responsible for setting the overall strategic direction and goals of the organization. Directors provide oversight and guidance to the senior management team. They are accountable to the shareholders and often play a role in corporate governance. Managers: Managers are responsible for a speci c department or team within the organization. They develop and implement strategies to achieve departmental goals. Managers plan, organize, and allocate resources to ensure ef cient operations. They are responsible for supervising employees and making decisions within their area of authority. Supervisors: Supervisors are typically front-line managers who oversee the work of individual employees or a small team. They ensure that work is completed according to established standards and procedures. Supervisors provide guidance, coaching, and feedback to employees. They are responsible for monitoring performance and addressing issues within their teams. Other Employees: Other employees include all staff members who are not in leadership or management roles. They perform their assigned tasks and responsibilities to contribute to the organization's success. Employees follow the direction of their supervisors and managers. They are expected to collaborate with colleagues and communicate effectively within and across departments. Page 64 of 232 fi fi Interrelationships between these roles Directors and Managers: Directors set the strategic direction, and managers implement it. Directors provide guidance and oversight to managers. Managers report to directors on the progress and performance of their departments. Managers and Supervisors: Managers oversee multiple teams or departments and provide guidance to supervisors. Supervisors report to managers and communicate challenges and successes within their teams. Managers support supervisors in achieving departmental goals. Supervisors and Other Employees: Supervisors guide and manage the work of individual employees or teams. Employees report to supervisors and seek guidance or clari cation as needed. Supervisors facilitate communication and collaboration among team members. Other Employees: Employees collaborate with their colleagues to accomplish departmental and organizational objectives. They may escalate issues to supervisors when necessary. Employees are responsible for their individual tasks and contribute to the overall success of the organization. Page 65 of 232 fi Management The primary role of management in an organization: Planning: setting aims and targets for the organisations/department to achieve. It will give the department and it’s employees a clear sense of purpose and direction. Managers should also plan for resources required to achieve these targets – the number of people required, the nance needed etc. Organizing: managers should then organize the resources. This will include allocating responsibilities to employees, possibly delegating. Coordinating: managers should ensure that each department is coordinating with one another to achieve the organization’s aims. This will involve effective communication between departments and managers and decision making. Commanding: managers need to guide, lead and supervise their employees in the tasks they do and make sure they are keeping to their deadlines and achieving targets. P