business-studies-prelim-study-notes-636045daed122.pdf

SYLLABUS TOPICS 1. Nature Of Business 2. Business Management 3. Business Planning NATURE OF BUSINESS ROLE OF BUSINESS 1. Profit - What business owners receive for producing goods and services - Profit = Revenue - Expenses...

SYLLABUS TOPICS 1. Nature Of Business 2. Business Management 3. Business Planning NATURE OF BUSINESS ROLE OF BUSINESS 1. Profit - What business owners receive for producing goods and services - Profit = Revenue - Expenses 2. Employment 3. Incomes - Businesses provide income to shareholders, employees and other business owners 4. Choice - Consumers have freedom of choice to purchase goods and services 5. Innovation - Existing products are improved or new products are created 6. Entrepreneurship and risk - Businesses provide individuals with opportunities and ideas 7. Wealth - Business activities result in high levels of economic growth 8. Quality of life - Businesses offer a variety of products that improve our standard of living TYPES OF BUSINESS ↳ Size and Geographical Spread - The size of a business is determined by: Number of employees Legal structure Source of finance Market share Small Business Medium Business Large Business - Less than 20 staff - 20-199 employees - 200+ - Sole trader or Partnership - Partnership or private - Public company - Source of finance comes company - Money from loans, profits from owners - Money can come from loans or sale of shares - Market share = Small and and private shareholders - Market share = large and usually local area - Market share = medium nationally - Geographical spread = how big the area is that a business sells to Local area E.G. corner store National area E.G. David Jones Global area E.G. McDonald's ↳ Industry Structure = a group of businesses that are involved in similar types of production 1. Primary industry = production involves natural resources - Farming and mining 2. Secondary industry = involves taking raw materials and making them into products - Bakers take flour from the primary industry to make bread which is then sold to consumers 3. Tertiary industry = involves performing services for other people 4. Quaternary industry = services that involve transferring and processing information and data 5. Quinary industry = services that used to be performed in the home - like hairdressing and childcare ↳ Legal Structure Liability = legal responsibility - Unlimited liability (UNINCORPORATED) = the business and the owner are the same - Limited liability (INCORPORATED) = the business is legally separate from the owner and the corporation is responsible for all business debts Public Business Enterprises = businesses that are owned by the government (E.G. Australia Post Office) Types of Private Business Enterprises: 1. Sole Trader = owned and operated by one person Advantages Disadvantages - Make all decisions(no manager - Unlimited liability (if in debt sole disputes) trader would have to sell - Receive all the profit personal assets) - Low start-up costs - Less expensive to operate 2. Partnership = owned and operated by 2-20 people Advantages Disadvantages - Shared workload and - Unlimited liability responsibility - Employee disputes (can’t agree - Less costly to operate than a on decisions) company 3. Private Company = having between 2-50 people to be private shareholders Advantages Disadvantages - Limited liability - Incorporation process to become - Makes it easier to get finance a private company is expensive  4. Public Company =a types of private company enterprises because they are owned by private individuals Advantages Disadvantages - Limited liability - Incorporation process to become - Makes it easier to get finance a public company is expensive - Have to publish financial reports for the public to see ↳ Factors Influencing Choice of Legal Structure - Size Small businesses = sole trader or partnership Medium business = partnership or private company Large business = public company - Float = rasing money through the sale of shares to the public on the ASX which makes business a public company - Ownership Complete control = sole trader Shared control = partnership or private company Control reduced when divided amongst shareholders = public company - The amount of control you have is related to how many shares owned - Finance Unlimited liability (not separate from business) = sole trader and partnership - High risk for investors and banks - Most of their finance is limited to their own savings and small loans - E.G. small businesses unlikely to get a large loan Limited liability (separate legal entity) = private and public company - Easier to getg money from investors and banks - Can raise money by selling shares - If owner wanted to use their own savings = sole or partnership with unlimited liability - If owner wanted to finance through shares = private or public company with limited liability INFLUENCES IN THE BUSINESS ENVIRONMENT ↳ External Influences on Businesses = factors outside business control 1. Economic - Businesses experience economic cycles which are periods of growth and decline (impacts production, income, spending and employment) - Boom = expansion of the economy → increased spending, production and employment (boom period can happen during Christmas) - Recession = contraction of the economy → decreased spending, production and employment 2. Financial - Businesses can access money from overseas  3. Geographic - Affects where businesses buy from and where they sell to 4. Social - Businesses must identify and respond to changes in tastes, fashion and culture - As trends change businesses must change too 5. Legal - Business owners face legal obligations in most aspects of the business - Legal obligations include: Staff well-being Paying tax Workplace health and safety 6. Political - How the government impacts business through policies and decisions - Main things that affect businesses are Policies on the environment Taxation 7. Institutional - Different institutional place regulations on businesses - Regulatory bodies which monitor and review business actions 8. Technological - Advances in technology make practices more efficient and easier 9. Competitive Situation - Forces businesses to aim to produce the best product at a low cost - Competitive advantage = the edge businesses have over competitors 10. Markets - Different markets include: Financial - Changes in financial markets make it easier for businesses to access overseas funding Labour - Changes in labour markets have increased demand for skilled workers Consumer - Changes in consumer markets have allowed businesses to sell to a global market ↳ Internal Influences on Businesses = factors within the business and can be changed by management 1. Products - The types of goods and services produced influence the business 2. Location - Where the managers decide to set up - Bad location = customers not coming to business or don't know about the business 3. Resources - Human resources  - Information resources - Physical resources - Financial resources 4. Management - The type of organisational structure the manager wants for the business - E.G. if the manager wants one person for each role or wants fewer employees who can do multiple roles (this is known as a flatter organisational structure) 5. Business culture - Ideas, values and beliefs shared by members of the business - Businesses decide if they want a formal culture or casual culture of their business ↳ Stakeholders = anyone who isintersted in the business or is affected by what they do - Main stakeholders include: Shareholders - Are a type of owner of a business who bring shares to the company - When a company gives some of its money to each shareholder it is called a dividend Managers - They are stakeholders because their job is to run the business - Any decisions made will affect their work adn their income Employees - Employees are stakeholders because they depend on getting paid Customers - Are stakeholders to businesses as they are affected by changes from the business (E.G. if the menu changes or the stor location) Society - We are all affected by what businesses do (E.G.business donating tio charities or holding public events) Environment - The environment is impacted by product production when greenhouse gases are released (businesses have to be environmentally careful) BUSINESS GROWTH AND DECLINE ↳ The Business Life Cycle and Challenges - Establishment Starts as a small business and sole trader or partnership CHALLENGES → sales are slow and not constant and highest risk and failure rate - Growth Increased sales and introduction of new products CHALLENGES: not to expand the business to quickly as it can be expensive leading to high chances of going into debt and business failure  Merger = when two businesses agree to join together and form a new organisation Acquisition = when one business buys another to have control and use of their resources Vertical integration = when a business expands at different but related levels in the product and seeling of a product Horizontal Integration = when a business expands with another firm that makes and sells similar products Diversification = when a business expands with anothe business in a completely different industry - Maturity When sales slow down and theres no more room in the market to keep selling the product Business has grown into a medium or large business and is private or public company CHALLENGES: no room is left is the market and sales level off - Post Maturity 3 options for a business once they reach this stage 1. Steady State (keep sales going) 2. Renewal (seel to other business) 3. Decline (sales fall and the business fails) ↳ Business Decline and Cessation - Reasons for the business decline: 1. Lack of management expertise 2. Insufficient funds - Undercapitalisation (lacking finances for business operations) 3. Failure to meet consumer needs 4. Competition - Cessation = another word for ending (ending of a business) - Once a business enters decline there are 2 options: 1. Involuntary cessation = forced by others to close down 2. Voluntary cessation = owner’s choice to wind up operations - Involuntary cessation: Sole traders and partenerships end via bankruptcy hence personal items are sold (because they have unlimited liability) - Private and public companies try voluntary administration (a person is hired to get the business out of debt) otherwise they go into liquidation (bankruptcy) BUSINESS MANAGEMENT FEATURES AND SKILLS OF EFFECTIVE MANAGEMENT ↳ Features of management: - Managers coordinate what the business owns to achieve what they want, this involves: Working with employees Using resources efficiently and effectively ↳ Skills of management: - Interpersonal Skills needed to work and communicate with other people to understand their needs E.G. skills you would use in a group setting - Communication Effectively saying what you need and listening to other people - Strategic thinking Ability of the manager to see the broader picture (seeing the bigger picture) - Visions Shared sense of direction - Problem solving Searching for different ways to solve an issue - Decision making Choosing a solution - Flexibility Being able to anticipate and adjust to change - Adaptability to change Being able to anticipate and adjust to change - Reconciliation to conflicting interests of stakeholders Managers needs to satisfy both the stakeholders interests and they do this be comprise and problem solving One way to reconcile their difference is by using a process called stakeholder engagement - Stakeholder engagement = sharing information with stakeholders and asking for their opinions BUSINESS GOALS AND ACHIEVEING A MIX OF GOALS ↳ SMART GOALS: - Specific - Measurable - Achieveable - Realisitc - Time Bound ↳ Business Goals (businesses aim to): Financial Goals include: Maximise profits Increase marker share Maximise Growth - Internal growth E.G, hiring more people - External growth E.G. merging or acquiring other businesses Improving Share price - Encourages people to invest ion the business Social Goals include:  Community service - Community events, educations and welfare activities E.G. businesses sponsoring local sporting clubs Providing employment - Hiring people from the local area to support the community mainly for local cafes or restaurants Environmental Goals include: Sustainability - Managers set goals to operate sustainably by using less energy or recycling ↳ Staff Involvement (ways managers can get staff involved): - Innovation = giving staff the opportunity to be innovative (encouraging creativity) - Motivation = higher motivation = higher productivity (causes people to work harder) managers use higher pay, bonuses or extra holidays to motivate employees - Mentoring → managers use mentoring programs therefore more experienced staff members offer advice and guidance (used to offer support) - Training → include on-the-job training or seminars for their work (managers do this because it improves productivity and skills) MANAGEMENT APPROACHES ↳ Classical/Scientific Approach: - Function of this approach is to: Plan, Organise and Control Organisation and Business Structure Levels of Management Style Allocation of Tasks Management Jobs are broken Strict hierarchical Many levels of Autocratic style down into simple structure management tasks (only certain Manger makes all people do certain Clear lines of Decisions made by decisions and things) communication and top levels of dictates work (can responsibility management be controlling) Only gives financial rewards ↳ Behavioural Approach: - Function of this approach is to: Lead, Motivate and Communicate Organisation and Business Structure Levels of Management Style Allocation of Tasks Management Importance of Flatter Fewer management Democratic style teamwork organisational levels structure Shared decision Social and financial Focus on making rewards Staff involvement communication skills ↳ Contingency Approach: - Doesn’t have management function because it depends on the situation and which approach (behaviour or classical) suits the situation better Organisation and Business Structure Levels of Management Style Allocation of Tasks Management Flexibility Pyramid or flatter Varies Depends on the structure business Adapting Depends on what is management effective in the approaches to suit situation the circumstances MANAGEMENT PROCESS ↳ The Business Functions 1. Operations = activities to make a product 2. Marketing = activities to make consumers want and buy the products (who wants the product, what it is going to look like, how will it be promoted) 3. Finance = activities involved in organising the business’ money and making sure it is used effectively (keeping up with financial statements and keeping track of how the business is doing financially) 4. Human Resources = activities involved with hiring and staff wellbeing ↳ Coordinating Key Business Functions and Resources - All the business functions depend on each other and if one makes a decision then all other functions are affected Interdependence = the mutual dependence that the four functions (operations, marketing, finance and human resources) have on each other - A manager’s role is to make sure that they are all working together to achieve business goals E.G. If finances didn’t manage the money properly therefore business has less money to spend → marketing wouldn’t have enough money to promote the product therefore less people would buy it → if less people are buying the product then operations wouldn’t need to produce as much → if needing to make less product then the business needs less staff ↳ Ethical Business Behaviour - Triple Bottom Line → focuses on economic, environmental and social performance Economic should focus on financial goals (under business goals point) Environmental focuses on caring for the environment Social impact by supporting community events, charities and acting truthfully - Managers make sure all the four functions aim for the Triple Bottome Line  E.G. operations may use solar energy to reduce greenhouse gases and finance aims to write up truthful financial reports ↳ Operations (Business Function): Activities that operations are in charge of: 1. Goods or services - If a business makes goods operations rely more on machines - If a business offers services businesses rely on people Hence determining whether operations use machines or people to make the final product 2. Production Process = the process of using resources and changing them into the final product - Three steps to the production process: 1. Inputs → all the resources used to make the products (core materials = raw materials, equipment, money, staff) 2. Transformation → the process of changing the inputs into the final product 3. Output → the finished goods or services 3. Quality Management = making sure outputs meet customer expectations (the business only sells products that are good quality to their customers) - If a business can minimise faulty products then they can save money and time because they don’t have to redo the product again - Three ways operations can make sure products are of good quality: Quality control → using inspections at different points during the production process Quality assurance → using a system to achieve certain standards Quality improvement → using ‘total quality management’ (focusing on improvement in all business functions) ↳ Marketing (Business Function) Identifying the Target Market - Deciding who will want the product - A business can aim their target market towards the: Mass Market → arent targeting any particular group of people (everyone) - E.G. McDonalds and Google Market Segmentation → taking the mass market and dividing into groups based on common characteristics - E.G. ways to divide the market: demographic segmentation (age, gender, income), geographic segmentation (country or city) - Niche Market = a really small market segment (dog or cat owners) - Once target market is identified the product is marketed towards that group E.G. Makeup brands would advertise then products in womens magazines instead of men’s The Target Market = the group of people the business chooses to aim its marketing activities towards - Business like Mcdonald's use mass marketing - Businesses like Sephora use mass segmentation Marketing Mix (the four P’s)  - Once a business decides who the target market is they decide on the marketing mix, this includes decisions on the: 1. Product 2. Price 3. Promotion 4. Place Product - Under product marketers make decisions on: Product positioning → where we think the product sits compared to other products - Businesses make decisions whether to sit themselves in higher quality with expensive prices or lower quality with cheaper prices Packaging → what is the packaging going to look like? - The packaging should tell customers a message about the product Branding → word or symbol that allows us to identify the product - Allows us to identify the product Price = how much should we charge our customers? - A price too high → no one will buy it - A price too low → people think it is bad quality - Methods of determining prices: Cost Plus Margin = adding up all costs to make the product plus a percentage for profit Marketing Price = price depends on how much the product is in demand (more or fewer people wanting the product) Competitors Price = price is determined by competitors (looking at what other stores are charging) Promotion = informing and convincing consumers to buy the product The four parts of promotion (promotion mix) 1. Advertising → paid form of promotion and communicates a message through a mass medium (can be through TV, radio or social media) 2. Personal selling → face-to-face marketing by a salesperson 3. Sales promotion → involves activities to encourage people to buy the product (using coupons or loyalty cards e.g. buy 2 get 1 free) 4. Publicity → free news story or article Place (distribution) = how the product gets to the consumer Has different channels of distribution (the different ways the product can get to the consumer): 1. Producer to customer → direct contact with customer 2. Producer to retailer to customer 3. Producer to wholesaler to retailer to customer - Wholesaler is someone who buys large amounts of products then sells smaller amounts to businesses ↳ Finance (Business Function) - Stakeholders use the statements to read them and make decisions - Managers can look at them and see how the business is going financially - Useful for shareholders if they are looking to invest Financial Statements include: - Cash flow statement = cash going in and out of the business Done regularly (weekely or monthly) Tells about financial performance → they are done using data over a period of time Cash inflow (cash sales, dividends, payments from debtors) money going in business and cash outflow (paying creditors,expense such as rent, wages, insurances) money going out of the business Only records cash - Income statement = about measuring financial performance Done less regularly (done once or a few time a year) Tells about financial performance → they are done using data over a period of time 5 steps of measuring financial performance: 1. Revenue → all income from seeling products and dividends 2. Cost Of Goods Sold (COGS) → how much it was to make the goods that were sold - Opening stock + purchases - closing stock = COGS 3. Gross Profit → = the Revenue - COGS 4. Expenses → the costs the business pays to make revenue 5. Net Profit → the leftover money the business keeps - Gross Profit - Expenses = Net profit - Balance sheet = allows the business to compare what the business owns to what it owes other people Done less regularly(done once or a few times a year) Tell us about financial position → they are only using data on a set date Current assets kept for less than 12 months + non-current assets (land, building, equipment, car) kept for more than 12 months - Same with current and non-current liabilities Balance Sheet equation: - Assets = Liabilities + Owners Equity ↳ Human Resources (Business Function) HR includes the processes of: - Recruitment - Training - Employing contracts (legally binding agreement between employers and employees) - Separation-voluntary/involuntary (different ways people can leave the business) Human Resources cycle includes 4 stages: 1. Acquisition → everything involved with hiring staff - Recruitment and employment contracts come under acquisition stage 2. Development → developing staff and giving feedback for improvement - Training comes under development  3. Maintenance → making the employees want to stay within the business - Rewarding employees and keeping them motivated 4. Separation → deals with the ending of the employee and the employer relationship MANAGEMENT AND CHANGE = how managers are going to react to change in the business environment - Proactive = anticipating change and doing something about it important for businesses to be proactive because if they don't adapt to changes they will most likely fail ↳ Causes of Change: Responding to Internal and External Influences → change happens when businesses respond to the external and internal influences - External includes → economic, social, political, technological, etc E.G. economic influence can cause change in interest rates as they may increase the cost of borrowing money E.G. political influences cause changes in legislation which might affect business standards such as environmental standards and product safety - Internal includes → products , management, business culture, etc E.G. management can cause structural changes to the organisation such as going from many levels of management to a flatter organisational structure ↳ Managing Change Effectively Four different ways managers can manager change effectively: 1. Using business information systems = a system that uses technology to gather data and analyse information 2. Setting achievable goals - If business goals follow the SMART goal rules it sets a good aim for the business and they can be used as targets during change - This allows the business to keep the focus on the right things 3. Overcoming resistance to change - Reasons for resistance → fear of job loss, disruption to their routine, the financial cost of change or poor timing - All part of managements job to help overcome these feelings of resistance, managers can use strategies such as: Offer support and retraining hence reducing fear and anxiety of the change Change happens during a reasonable time frame (no making frequent changes all the time) Can communicate the change in advance so people have warning 4. Using management consultants = hiring a management specialist to get guidance and help through business issues → which can include managing the change - Provides the advantage that the consultant has lots of experience however they can be very expensive BUSINESS PLANNING SMALL TO MEDIUM ENTERPRISES (SME) = SME’s are defined by their size (small to medium businesses) - Factors that classify SME’s size include: Number of employees Geographic spread Legal structure Sources of finance - SME’s main roles are to: Provide employment Provide a wide range of products - SME’s economic contribution includes: Providing employment Contributing to exports Contribute to innovative products - Success and Failure Rates → failure rates for SME’s are high INFLUENCES IN ESTABLISHING A SME ↳ Establishing SMEs 1. Personal qualities of starting up a business: - Qualifications and Skills Influences what type of business you start up and who else is involved - Motivation The type of ways people are motivated to influence how they will start up the business and their decisions - Entrepreneurship How innovative someone is when starting up a business - Cultural background Traditions and beliefs that influence our business decisions (influences the type of products) - Gender Women are more likely to start up their own business 2. Sources of information = the different places and ways people can get advice and assistance These include: - Business contacts - Businesses in the same market - Online websites - Trade associations - Government agencies 3. Business Idea  = The initial idea that the business is based off - Must be competitive and provide a sustainable competitive advantage 4. Establishment options - The set up options faced when starting up a business: New business - ADVANTAGE → make all decisions - DISADVANTAGE → don't have a definite customer base Existing business - ADVANTAGE → existing customer base and equipment - DISADVANTAGE →can have a previous bad business image and resistance to the change Franchise - ADVANTAGE → use a well-established name and advertising benefits (existing customer base) - DISADVANTAGE → franchisor can be controlling and have to share profits 5. Market Considerations - Who will buy the product? Finding target market - What's the best selling price? Using pricing methods to determine prices - Where is the best location? Wanting a visible store or close to distribution and supply channels 6. Finance = have to make a decision based on the type of finance and its cost - Debt finance = loans from banks and finance companies (money you have to put back) - Have to pay interest - Equity finance = money put into the business generally by its owners (you own the money so you don't have to pay back) - Might not get a return on your investment ↳ Establishing SMEs: Legal, Human Resources and Taxation 1. Legal factors = obligations of an SME to follow regulations when starting up and to operate a business - Business Name - Zoning Regulations to separate activities that don't belong together - Health Regulations Standards businesses have to follow to receive a license that allows them to operate 2. Human resources - The skills and costs considered when hiring employees 3. Taxation = Both federal and state governments impose taxes. These include:  - PAYG = employer takes a part of what they pay you to put towards your tax - Fringe benefits tax = tax on fringe benefits (the extra benefits to an employees salary such as a company car) - GST = tax of 10% on the supply of most goods and services - Company tax = payment of a proportion of what the company earns - Capital gains tax = tax on any income received for selling assets - Stamp duty = paid documents that give evidence of transactions THE BUSINESS PLANNING PROCESS ↳ Sources of Planning Ideas - A way of planning ideas is a Situational Analysis (SWOT) Strengths Weaknesses Opportunities Threats - SWOT gives an overview of the internal and extneral environment ↳ Vision, Goals and Objectives - Managers decide on a vision statement: the broad system thar states what the business is aiming for it purpose and what it does - Making specific goals: the goals need to be SMART goals → can also have financial and communit goals (businesses can sponsor others) - Businesses have an objective of the business: a specific statement detailing what needs to be achieved oi order to accomplish the businesses vision’s Types of objectives managers can make - Operation objectives = short term and are usually over a couple days - Tactical objectives = time frame of 1 to 2 years - Strategic objectives = long term and planned to be achieved over 5 or more years (a series of plans to work towards the long term growth of a business) ↳ Organising Resources - Managers will need to decide on the following when allocation resources - The Business Functions: Operations - Type of equipment and raw material used - Who are the suppliers - Technical skills required by employees to make the product Marketing - What is needed for the type of promotion - What sales skills do staff need - How do we get the product to the customer Finance - What type of finance - How much do we need - Organising business accounts  Human resources - Which skills are needed in the business - What recruitment and selection process is needed ↳ Forecasting = the businesses predictions about the future - Total revenue and Total Costs Total revenue = the total amount received from the sales of a product TOTAL REVENUE = total selling price x the quantity of products sold TOTAL COSTS = fixed costs + variable costs Fixed costs = stay the same - Rent - Insurance - Salaries Variable costs = change depending on how much the business produces - Raw materials - Wages - Transport cost for the product - Break-even analysis = how much needs to be sold (total revenue) in order to cover costs (total costs) QUANTITY = total fixed costs / selling price - unit variable costs Break even point is where the business isnt making profit or losing money - Cash flow projections = uses the cashflow statements and budgets to predict cash inflows (receipts) and cash outflows (payments) Helps managers figure out when to pay bills ↳ Monitoring, Evaluations and Taking Corrective Action = after setting business goals the process includes: monitoring, evaluating and taking corrective action - Monitoring = the process of measuring actual performance against forecasts - Evaluating = assessing how or why the outcome occured - Taking Corrective Action = changes to the business as a result that will improve faults Same process happens when looking at… Sales 1. Monitoring → Forecasts sales vs actual sales 2. Evaluating → Why are sales increasing or decreasing 3. Taking Corrective Action → making changes (new marketing techniques) Budgets Profits CRITICAL ISSUES IN BUSINESS SUCCESS AND FAILURE - Importance of a business plan IMPORTANCE = without a business plan there would be less planning and predicting the changing business environment Allows for organsiation and planning  Helps manager to be proactive Ables to manager to assess the internal and external business environment - Management - staffing and teams IMPORTANCE = using the right employees and with guidance the business is more likely to achieve its goals How good the manager is will impact how good the business is A good manager will use the limited resources of the business to best achieve the goals Uses staff and teams to achieve business goals - Trend analysis IMPORTANCE = allows the business to be proactive in changing environment and keep up to date with consumer wants Following external (fashion, economy, spending habits) and internal (sales, past profits ) trends within the business - Identifying and sustaining competitive advantage IMPORTANCE = helps differentiate the business from competitors over a long period of time Competitive advantage = the strategies used by a business to ensure it has an ‘edge’ over its competitors - Competitive advantage - Price/Cost → the business aims to reduce costs so that it can sell for a lower price - Competitve advantage → Differentiation → to offer customers something that is not already offered by competitors - Avoiding over extension of finance and other resources IMPORTANCE = over extending resources leads to waste and business inefficiencies hence increasing the risk of failure = if resources are over extended then business may have to pay more than they earn Over Extension can occur when: - Buying too many assets - Buying too much stock - Having too many employees - Borrowing too much money from the bank To avoid over extension: - Use equity over debt - Lease equipment / rent buildings instead of buying them - Do more market research - Flatter organisational structure or outsource - Using technology IMPORTANCE = keeping up with technology and embracing it as a business can keep you ahead of the game through cost savings and product development = the internet is allowing people and businesses to buy and sell products online - Business that dont keep up with technology can fall behind compared to competitors - Economic conditions IMPORTANCE = can manage these cycles and deal with fluctuations to avoid failure - Different economic conditions promote business success and failure  DEFINITIONS: Manager = someone who coordinates the business’ limited resources in order to achieve goals Stakeholders = Anyone who is interested in or affected by business activities Stakeholder Engagement = sharing information with stakeholders and asking for their opinions Private Shareholders = specific people that put money into a business in return for owning part of it Goals = a desired outcome to be achieved within a certain time period Profit = the money left over after all the expenses have been subtracted from the revenue Revenue = the money made from selling the products Market Share = refers to the percentage of the total sales in a market earned by a business Share Price = how much each share costs to buy Management Approach = organising and allocating tasks to staff, creating a business structure, levels of management and the management style Interdependence = the mutual dependence that the four functions (operations, marketing, finance and human resources) have on each other Debtors = people that owe the business money Creditors = people the business owes money to Liquidity = ability of the business to pay debts back quickly Dividends = a sum of money paid regularly by a company to its shareholders out of its profits Liabilities = what the business owes other people Owners Equity = the monet put into the business and it makes the two side of the balance sheet (assets → what the business owns and liabilities → what the business owes) equal eachother Frachise = pay a set fee to open up a store under another company’s name Franchisee = the person who runs the franchise Franchisor = the business that allows someone to use their name Resource Allocation = the distribution of resources to successfully meet the business’ goals and that have been established Merger = when two businesses agree to join together and form a new organisation Acquisition = when one business buys another to have control and use of their resources Vertical integration = when a business expands at different but related levels in the product and seeling of a product Horizontal Integration = when a business expands with another firm that makes and sells similar products Diversification = when a business expands with anothe business in a completely different industry