Understanding Business

What a business does

• Has groups of people or staff working together
• Sells goods or services
• Has aims or goals
• Tries to make a profit
• Can either succeed or fail
• Uses resources (factors of production)

Factors of Production: CELL

• Capital
  • Machinery
  • The physical assets owned by a business
• Enterprise
  • The person who starts the business
  • The person who has an idea
  • Entrepeneurs
• Land
  • Natural Resources
• Labour
  • Staff
  • Factory Workers

Styles of Managment

• Autocratic
  • Authorative-style manager
  • Makes all of the decisions
  • Wants to be in charge all of the time
  • Pros
    • Decisions are made quickly
    • All tasks get completed
    • Useful for low skilled employees
  • Very little discussion with staff/employees, almost no consultation
  • Adolf Hitler, Joseph Stalin, Elon Musk, Vladimir Putin
  • Not very motivational for employees or staff
  • Cons
    • Low staff motivation
    • Wasted skills/expertise, as they may not be properly put to use
    • Separates management and staff into a state of “us” and “them”
  • Complete control of the company
• Democratic
  • Majority of company managers are Democratic
  • Both Management and Staff are involved in decision-making
  • Pros
    • Employees are involved and motivated
    • Staff skills can be effectively used
    • More trust, less supervision is needed
  • Discussions take place between staff
  • Workers are more empowered
  • Cons
    • Slows down decision-making
    • Many meetings required, discussion is needed
    • Might not work for inexperienced staff, could make mistakes
  • Barack Obama, Nicola Sturgeon, Jürgen Klopp
• Laissez Faire
  • Laid-back style manager
  • Staff can make their own decisions about carrying out roles
  • Pros
    • Boosts creativity of staff
    • Staff are very motivated and inspired, they feel empowered
    • Good for creative businesses like art, design, architects
    • Staff can plan their own individual structures
    • Doesn’t require lots of management resources
  • Mahatma Gandhi, Queen Victoria,
  • Managers give their staff a lot of trust
  • Staff can make lots of decisions about the businoss
  • Means “allow to do” in French
  • Cons
    • Tasks might be not completed on time, lack of supervision
    • Staff might not like the less structured approach, needs the right kind of person
    • Can go downhill fast if staff turn bad, too much trust

Entrepeneurs

• Skills

  • Delegation

    • Trusting somebody else with responsibility, to do on your behalf
    • Gives time for them to focus on other things
      • Manages time well to reduce stress

  • Decision-making

    • Can improve a business
    • Coming up with a solution to a problem
    • Being able to assess alternative paths

  • Leadership

    • A good leader will be able to motivate their employees
    • Being able to lead or guide someone
    • Setting a good example so others will follow
  • "Describe a skill which an entrepreneur should have." (1 mark)

  • Motivation

    • A reason for doing something
    • Encourages others to work hard
    • Ensures work gets completed on time

  • Good Communication

    • Able to talk to people and have them understand
      • Telling a customer about a product
      • Convince/Persuade investors to invest
    • Passing info between people effectively, over different mediums
• Qualities

  • Risk Taking

    • Ability to analyse risks and also to make decisions
      • Able to quit effectively or turn it around if something is not going well
    • Often must be done to increase success
    • Willing to do something that has a chance to go wrong, in order to achieve a goal
      • Willing to gamble company resources, if more profit is at the other end

  • Determination

    • Often motivated
    • Wants to do something
    • Setting goals and striving to achieve them
    • Doesn’t let anything stop them
      • Minimizing problems or working around them
  • "Describe a quality which an entrepreneur should have." (1 mark)

  • Confidence

    • Being able to speak up
    • Ethical Marketing
    • Showing others you believe in something

  • Enterprising

    • Lots of ideas
    • Having initiative

  • Flexibility

    • Able to change and adapt to plans
    • Able to change to match something if something unexpected comes up

Starting a Business

• Ask for advice
  • Networking
    • Ask other entrepeneurs
    • Exchange info between professionals
    • Usually in an informal setting
    • Develops relations and links with people
    • Highlights mistakes made by others
  • Young Enterprise
    • Can be entered in S6
    • A charity that allows young people to succeed by making a business
    • Helps develop skills, qualities, and gain firsthand experience
  • Publicly funded Government Agencies
    • eg. Business Gateway
    • Free advice
    • Masterclasses and workshops
    • Point you in the direction of investors, grants, and other funding
    • One-on-one advice and help
    • Helps you find your potential customers
    • Provides help with market research
    • Put you in touch with other entrepreneurs, staff, and suppliers
  • Prince’s Trust
    • Charity that supports 11-30 year olds
  • Development Agencies
    • eg. Highlands and Islands enterprise
    • Supports regional development
• Carry out market research
  • Look at what other companies are doing
  • Seek advice from others
    • Talk to an expert, or someone who has already started a business
    • Talk to a bank manager about money
  • Ask people using questionnaires
• Needs a good idea from the Entrepeneur
  • Idea could be found by accident
• Give your business a unique identity
  • Name
    • First thing a potential customer will see
    • Needs to give a good impression to attract them
    • Needs to be short, simple, catchy, and easy to remember
    • Needs to be original so it will stand out and stay relevant
    • Use key words that are similar to what your business provides, so customers will know what the business does
  • Logo
    • A picture/symbol that represents your business
    • The business name in a fancy design
    • Must be eye-catching but not an eyesore
    • Needs to be easy to reproduce for different applications, not too complex
    • Has to be simple but recognisable
  • Slogan
    • A short, catchy phrase associated with your business
    • Should be short, sweet, simple
    • Should be recognisable whenever the text is seen or heard
    • Has to be very memorable and strongly linked with the brand
• Decide on which type of business you want to create
  • Partnership, Franchise, PLC, LTD, etc
• Draw up a business plan
• Secure finance/money
  • From your own savings or inputs from partners
  • From investors
  • From government grants
    • Usually provided if you do something for the public or are creating lots of jobs
  • From bank loans or business loans
• Organise the 4 factors of production
• Sell to your customers
• Make marketing decisions; The 4 Ps
  • Product
    • Having new products or a wider range or selection for customers
  • Place
    • Being in a more convenient location for customers to buy from
  • Price
    • Customers will often choose cheaper prices for comparable products
    • Sales, Buy-one-get-one-free deals, bulk-buy deals, etc also
  • Promotion
    • New advertising campaigns can be used to attract customers

Departments/Functional Activities of a Business

• Human Resources
  • Manages staff/employees in the business
    • Recruitment of workers
    • Training of new workers
    • Ensuring Health & Safety
  • Has multiple different styles of management
  • Managing industrial relations
    • Keeps good relationships between employers and employees
    • Ensuring good working conditions
    • Managing legal grievances or complaints against the business
• Marketing
  • Funds marketing research
  • Makes sure that demand can keep up with supply
    • Uses the 4 P’s of Marketing
    • Puts on promotions, discounts, deals, etc to increase demand
  • Relies on the finance department to provide money for marketing
    • They set budgets for new websites, advertisement costs, etc
  • Promoting the whole business, including advertising jobs
    • Sets up social media platforms to inform customers and give a good impression for the business
  • Informs customers on what they are actually buying
• Operations
  • The department that makes the goods/provides the service
    • Purchasing required materials
      • Choosing suppliers that make high quality or well priced materials
    • Distributing products to customers, possibly via retailers
    • Control and ensuring of Quality
      • Makes sure of good quality production methods to bring the product to an acceptable standard
• Finance
  • Manages money that goes in and out of the business
    • To pay suppliers
    • To pay wages
    • Receiving payments
  • Funds all other departments
  • Manages money inside the business
    • Raising money via loans or government grants
    • Preparing business budgets
    • Preparing final accounts, reports on how much profit/loss was made and how much the business is worth

A Successful Team

• Organization/Leadership
• Motivation/engagement among members
• A clear, common goal
• Good communication

Sectors

• Sectors of Industry
  • Secondary Sector
    • Makes things more useful for normal people 
      • Would you rather receive a big log of wood, or some nice furniture or firewood made from that log?
    • Manufactures, processes, and sells products
    • Electronics manufacturers, Construction industry, Making hardware, Distilleries, Oil refineries
    • Uses outputs from the primary sector
  • Relate to what businesses do and where they operate
  • Primary Sector
    • Exploits and extracts raw materials from the natural environment
    • Logging, Oil production, Farming, Fishing, Mining industries
  • Tertiary Sector
    • Sells access to services, does something for you
    • Window cleaning, Hotels, Retailers, Hospitals, Schools
• Sectors of the Economy
  • Private Sector
    • Types of private sector business
      • Sole trader
        • Money from personal savings, government grants, or loans
          • Can be difficult to acquire finances
        • Business owned by just one person, usually a small business with no/not many employees
          • Lots of work needed from one person
        • Business profit is treated as the owner’s wages, income tax is paid instead of corporation tax
          • Privacy for finances, only the HMRC need to know about your financial position
          • Income tax can be higher than normal Corporation Tax
        • Easy to set up a sole trader business
        • Owner makes all business decisions
          • “tHeY ARe tHeIR oWN bOSS”
          • Owner is responsible for all business problems, including Debts
        • Limited access to finances
        • If you have no employees, you can choose your own hours, but it can be difficult to take time off
          • Taking time off can put your business in jeopardy if you have bills or work to do
        • Difficult to grow big
          • Difficult to take advantage of the economies of scale eg. bulk buying
        • Fully responsible and liable for all debts: Unlimited Liability
          • Debt can eat into your private life, can be paid off by personal funds and assets
        • May give you a sense of freedom or satisfaction
      • Partnership
        • Partnership Agreement
          • Must be signed by all partners
          • Shows how much money is invested by each partner
          • Allocates roles, sets out responsibilities for partners
        • Needs a minimum of 2 people to set up
        • Also has unlimited liability
          • Liabilities are shared by everyone in the partnership
        • Business owned by between 2 and 20 people
          • Must share profits between owners
            • Can pay wages based on work done, and also split profits equally
            • Losses are also shared between owners
        • Business decisions are made by all partners
          • It can be difficult to come to an agreement with others
          • More ideas being involved
        • Can have shareholders
        • Can be easier to grow a business than as a sole trader
          • Easier to start big, as partners can bring in capital or money
          • More partners means more networking with others
        • Business name is often the partners’ names, eg. Munro & Noble
        • Also may employ staff
      • Public Limited Company - PLC
      • Private Limited Company - LTD
        • Has limited liability
          • Debts and liabilities do not extend to the owners’ personal assets
          •  A company is a separate legal entity to its owners
            • If something happens, the business gets sued, not the shareholders
          • Shareholders and owners do not legally have to pay any company debts outside the value of the shares they hold
        • Must pay corporation tax
        • Businesses are generally medium-sized, like food producers or a family-owned business
        • The company is owned by its shareholders
          • Maximum of 50 shareholders
          • Shareholders get paid in dividends, all profits are shared between shareholders
          • Shares are not sold publicly
            • Existing shareholders must agree to invite a new shareholder
          • Shareholders don’t participate in the running of the business
        • The business is funded by selling shares and retaining the profits in the business
        • The company is run by an elected board of directors
          • Owners may put themselves forward to be elected, and other owners cast votes
          • Directors can be employed by the company
        • Must be registered by the Companies House in the UK
          • More difficult to set up than a sole trader or partnership business
          • A lot of fees, documents, and legalities to sign and have to be approved
        • Financial information in the business has to be made available to the public and is recorded by Companies House
          • Less privacy for some people
    • Businesses owned by private individuals
    • Aims to make a profit, by earning more than it spends, to ensure survival
    • Taxed by the government
    • You can invest or buy shares in these businesses sometimes
  • Relates to how businesses are owned, what they aim to do, and how they are financed
  • Public Sector
    • Services for education or the NHS for healthcare, the police force or the army
    • For the good of everyone in society
    • Businesses for the public, funded by the government
      • Money from Taxes
      • Money from selling assets, like council houses
      • Money from Government grants
      • Money from non-domestic rates
  • Third Sector
    • Funded by several means of finance
      • Sponsored by private businesses
      • Donations 
      • Lottery Grants
      • Government grants
      • Profits from selling services or goods, like merchandise or a cafê
    • Non-profit organisations like Charities
    • To raise awareness of a cause and to raise money for them
    • Charities, Community organisations,
    • Ran by volunteers or employees, but not owned by individuals
    • Can have employees eg. to manage finances or a board of directors to make key decisions
    • Types of third sector businesses
      • Charities
        • An organisation made only for public benefit
        • eg. Shoebox Appeal, Highland Hospice, Oxfam,
        • Cannot aim to make a profit, though are still able to make one
        • The UK Government has a charity register, you have to register to become a charity
        • Charities are regulated by the OSCR (Office of the Scottish Charity Regulator)
          • Makes sure they aren’t dealing in illicit activities or exploiting volunteers/workers
          • Charities must submit annual accounts to them, to make sure they aren’t earning money fraudulently
        • Charities are exempt from paying most taxes
        • Often employ a small number of people to oversee the organisation, the rest are volunteers
        • Mainly rely on donations and fundraisers as income
          • Fundraising events such as bingo nights also help too
            • Events are commonly sponsored by private businesses, such as the Baxters 5K
          • Commonly allow donations by setting up a direct debit to pay monthly
            • Allows to plan better for the future because of more stable income
      • Voluntary Groups
        • Staffed and ran by volunteers
        • Ran by a committee of elected volunteers
        • Aim to bring people together who have similar interests
        • Can also gain money by charging a fee to become a member or use their services
        • eg. youth groups like Scouts, or Community Woodlands Association
      • Social Enterprises
        • An organisation which aims to make a profit, but re-invest or donate money rather than using it directly
        • They are businesses, but invest at least 50% of their profits back into their community 
          • They still provide goods and services, but operate in the third sector
        • One of the fastest growing business areas in the world
        • Funded by normal methods, as well as loans, sometimes by equity finance (part ownership of business)
        • They help tackle social problems in a community
          • Giving training to people
          • Improve life chances, eg. help homelessness
          • Supports low income communities and also provides volunteering and job opportunities
          • This leads to a good reputation with society
          • A hub that provides a valuable service 
        • eg. Toms, with their one-for-one marketing strategy, and Social Bite, helping by giving food to homeless people
        • Often helps recycle or reuse donated items
        • A lot easier to get funding support like grants than private businesses

Chains of Production

• Primary sector extracts whatever materials from the environment
• Secondary sector receives materials from primary, manufactures into products
• Products are either directly sold to consumers or to Tertiary sector businesses

Franchising

• There needs to be a business agreement between the Franchisor and the Franchisee
• Franchisor is still the owner of the business, but the franchisee operates the business under the established name
• Pros
  • Allows franchisee to use  the well-known name and products of the business
  • Franchise gets training, advice, and support from the Franchisor
  • An easy way to expand a business, almost guarantees quick growth for both Franchisor and Franchisee
  • Lets franchises manage themselves, reduces management load on the business
• Cons
  • Might cost more to set up
  • Franchisee pays a portion of annual revenue or profits, or sometimes a fixed fee, to the franchisor
  • Has to use the company logo, colours, goods/services, marketing, and store layout. Limited control
  • Bad publicity in one branch can affect the reputation of every branch
  • Confidential info, eg. sales stats or secret recipes, must be shared with a franchisee, might be difficult to trust

Business Sizes

• Small business
  • Owned and often ran by a sole trader or small partnership
  • Often sells goods/services locally
  • Operate locally in one area, like Inverness or the Highlands
  • Can employ up to 50 people
• Medium business
  • Owned and ran by a group of partners, shareholders, or directors
  • Can provide goods and services either locally or nationally
  • Employ between 50 and 250 people
  • Operate nationally throughout one country, often based in a big city and are household names in that country
• Large business
  • Benefits of becoming a global business
    • Increases revenue
    • Increases market share
    • More brand recognition and credibility
    • Allows for locating in areas with lower minimum wage or lower tax rates
    • Can cater easier to local needs
    • Benefits easier from the Economies of Scale
    • Can receive larger grants or incentives from Governments
  • Owned by a large number of shareholders and run by a group of directors appointed by them
  • Sell goods/services in many locations, often globally
  • Operate in more than one country, internationally or multinationally, and tend to be large businesses like PLCs
  • Employ over 250 people

Aims and Objectives

• Aims must be SMART

  • Specific
    • Has to be a clear goal
    • So you can actually tell what you want to achieve
  • Measurable
    • Must be easy to tell when you have reached an objective
    • Must have a specified, quantitative goal
  • Realistic
    • Actually reachable, so it doesn’t put you off and demotivate you
  • Timeframe
    • A timeframe motivates you to work on something
  • Agreed
    • So you can check in with others eg. shareholders and tell others about your target
    • Agreeing on objectives gives them a far better chance of success

• Targets a business sets to try and achieve

• Aims depend on several factors

  • The type of business
  • The level of competition in that market area
  • The sector of industry/economy the business operates in
  • Whether a product/service is a necessity or a luxury

• Common financial aims

  • Survival: Stayin’ alive
    • Continuing to trade and staying in business, can be hard in times of crisis eg. Covid or recession
    • At minimum breaking even, without profit or loss
  • Provide a good or service
    • Being able to sell or otherwise provide your product or facility to your customers or to the general public
  • Becoming bigger/Growth
    • Become larger in size, create more branches
    • Could involve combining with another business or merging with them
    • Some businesses don’t want to grow, maybe to stay local or keep controlled
  • Maximising sales
    • Increase the number of products sold to customers
    • Make sure that it is still an achievable and measurable target
      • eg. To sell all product that has been produced
      • “As much as possible” is not a measurable target
  • Maximising profits
    • Actieve a target figure of profits
    • Limited to private sector businesses
    • Minimise costs while maximising revenue
  • Market share
    • Keeping ahead of competing businesses by collecting more customers than rivals
  • Financial security
    • Making sure costs are met without endangering the business or personal possessions, depending on liability 
• "Compare the objectives of John Lewis & Partners with those of a charitable organisation." (2 marks)

• Common non-financial aims

  • Social responsibility/Ethics
    • Making sure the business has a good reputation in the community
    • Acting to save the environment, supporting and donating to local charities, helping food banks, etc
  • Personal Satisfaction
  • Customer satisfaction
    • Ensuring that customers get the goods or services they want or need
    • This encourages loyalty with customers, and customers may recommend the brand to others
    • “hAPpy cUStOMErs”
  • Efficiency
    • Making sure of highest possible quality product/service with lowest possible time, cost, waste
    • Controlling and lowering costs, possibly able to increase target profit as well
    • Higher efficiency allows for less waste, meaning higher profit margins on products or services

• Mission statement

  • A statement written by the business saying what the business does and what purpose it serves.
  • Embodies the company’s values, primary goal, and vision in a sentence or two
  • Good for motivating both employees and customers

• Public sector aims

  • Help the public
    • Use taxes paid by citizens to provide essential services to as much of the public as possible
  • Customer satisfaction
    • To meet the needs of locals and residents, improving services like roads or facilities
  • Efficiency
    • Staying close to a budget while managing finances

• Third sector aims

  • Help groups
    • Use donations and other funding to improve the lives of groups
  • Create awareness
    • Allows for increasing level of donations and support

Business Ethics

• Good ethics can be used to promote products, can give them a unique selling point
• In current times, businesses are pressured more than ever to act ethically
  • Customers are more aware of what businesses are doing
  • It’s easier for people to switch to another business due to more choice
  • Governments are pressuring businesses to act more environmentally friendly etc
• Often referred to as CSR or Corporate Social Responsibility
• Ethical business try to minimise a negative impact, and also try to make a positive impact on both the environment and society
  • Involves paying workers and suppliers fairly, protecting the environment, and overall “doing the right thing”

Influences

• Internal factors: from inside the organisation
  • Human Resources: Employees
    • Employees carry out duties based on their assigned role
      • eg. Cleaners can be employed to clean windows, Doctors can be employed to treat patients
    • Can be employed at an hourly rate, or at a fixed salary
    • Affect how businesses work, by their performance of work or going on strike
      • Mistakes incur more business costs, or can hurt the business reputation
      • Employees are also critical to helping achieve the aims of a business
    • A business often provides training, compensation, and other benefits to employees
  • Human Resources: Management
    • Managers have more responsibilities and control than normal employees
      • Their decisions have more impact, and there is more potential for things to go wrong if bad decisions are made
    • There are multiple styles that management can have
    • It is important for a manager to have proper leadership skills
  • Technology
    • Usage can help a business operate better or beat competitors
    • Can be used in several positions in the business, but employees must be trained to use it
    • Lack of technology can make orders more difficult or slower to process
    • Is often expensive to build up in a business
    • Cutting edge developments can be risky, but might help the business survive
  • Finance
    • A business needs money to:
      • Fund expansion
      • Development of new products
      • Pay for company bills: wages, cleaning, electricity
      • Buy new equipment (capital)
      • Fund production of product, or purchase wholesale product
      • Advertise the business
      • Survive, grow, and succeed
    • May need to borrow money if finance is low
    • The cash a business has in the bank
    • Bad control of finances can put off investors or shareholders
      • Causes cash flow problems: the biggest cause of business failure
• Can motivate, change, or even destroy an organisation or its objectives
• External influences cannot be controlled easily, but businesses can change how they react to them
• Can affect businesses positively, by presenting an opportunity, or negatively, by causing a threat
• External factors: from outside the organisation - PESTEC

  • Political

    • Laws of the country it operates in must be followed
    • Must keep up to date with legislation
      • Businesses have to spend money to meet legislation, such as health and safety regulations
    • Competition laws control companies becoming too large or company merging
    • Employment laws control minimum wage and workers’ rights, safety laws
      • Forcing higher wages means a business might have less profits
    • Equality laws control what employers are allowed to know about employees and prevent discrimination
      • Makes sure that people get paid fair wages, not based on age, race, gender
    • Politics is linked with the government and the public sector
    • Governments control planning permission, whether a factory can be built or expand
      • Affects number of jobs available, which can affect unemployment rate or job market competitiveness
      • Affects businesses ability to expand and grow
    • Environmental laws force businesses to act ethically and not harm the environment
    • Government can increase or decrease individual tax or corporation tax
      • Higher corporation tax means that businesses have less profit, can’t invest as much
      • Higher individual tax means that people don’t have as much money to spend on businesses
    • Government spending more on education can increase skills of future employees

  • Economic

    • Interest rates change the cost of borrowing money
      • More interest means it costs more to borrow, decreasing business profits
      • Less interest means it costs less to borrow, increasing the ability for businesses to grow
    • The business cycle: Economic boom, downturn, recession, slump, recovery, boom, repeat
      • In a boom, unemployment is going down, sales and profits are rising for many businesses
      • In a recession, unemployment rates are rising, workers are not spending as much, businesses are making less profits

  • Socio-cultural

    • Fashion trends can easily be recycled after several years to save on design costs
    • Changes in lifestyles, tastes, demographics, and values affect what they want to buy
      • Affected by fashion trends, ethical issues, and lifestyle choices
      • The media can influence customers, including social media, reviews, films, and news
      • Trends affect whether producs are in or out of fashion, brands can follow these trends to sell more product
      • Customers often spend more on businesses they feel care about the environment or have good affects on society
  • "Explain the ways that Political, Social, and Economic factors may affect an organisation." (3 marks)

  • Technological

    • Changes in technology must be kept up with to help a business’s survival
    • Businesses may have to enter new markets, like the internet, to stay competitive or grow
    • New IT or electronic systems might be able to improve the productivity of employees
      • Remote working removes costs of having to pay for office buildings or equipment
    • New technologies can also open new opportunities for businesses, such as being able to increase efficiency
    • Robotics can be used to automate production lines, or act as a cheaper alternative to employees
      • No component of human error, robots don’t get tired and only cost in electricity
      • Helps easier mass production of standardised products, lower prices and higher quality
      • Investments can be very expensive or slow initially and may lack funds, but will be cheaper long-term
    • The more a business depends on technology, the more it could disrupt a business if it is not set up correctly or is faulty
    • New and fancy technology can be used to attract customers

  • Environmental

    • Natural disasters can destroy capital, incurring huge costs for organisations
    • Businesses can influence the environment in several ways
      • Using recyclable or compostable materials or packaging in products
      • Disposing correctly of business waste
      • Reducing pollution of nearby air or water
      • Reduce their carbon footprint from transport or choice of suppliers
    • Some products or services might sell better in different weathers, eg. cold drinks on hot days
    • Bad weather can have detrimental effects on crops, buildings, and transport

  • Competition

    • Businesses competing with each other means there may be lower prices or more choice for customers
    • Rival businesses take away customers from others in several ways
      • Better marketing, 4 Ps of marketing
      • Better customer service, in case something goes wrong or a customer needs help
      • More convenience for customers, like home delivery instead of having to go out

Stakeholders

• "Explain how stakeholders of a supermarket could influence the success of the organisation." (4 marks)

• Stakeholders can be employees, suppliers, or customers

  • Anyone that has a positive interest in the business, what it does, and how it performs
    • Managers could be interested in product quality, efficiency, and profit levels
    • Employees could be interested in fair wages, job security, and working conditions
    • Owners could be interested in working conditions, profit levels, and business performance
    • Customers could be interested in social responsibility and product quality
  • Anyone who would benefit from the organisation surviving and growing

• External stakeholders can be banks, customers, suppliers, the government, local communities

• Stakeholders have (varying) power to influence the business

  • It can be difficult to meet the interests of all stakeholders at once
  • Interests of stakeholders can influence a business as it tries to meet their interests
    • Internal interests
      • Employees taking industrial action or changing their work quality
        • This could affect a business’s reputation
      • Style of management
        • Can affect employee motivation and performance
      • Could vote on decisions or suggestions
      • Level of employee motivation
        • Affected by rewards, pay management
        • Affects performance of employees
    • External interests
      • How the business affects the local community
      • Legislation passed by the government
        • The business is required to follow the legislation
      • Financial security and credit levels
      • Competitive pricing
        • Affects customer satisfaction and product sales
      • Social responsibility
      • Quality of product or service
        • Could affect satisfaction of customers

• Internal stakeholders can be employees, owners, managers, shareholders

Customer care

• Good customer care affects customer satisfaction
  • Customers are likely to be more loyal after good experiences with customer service
  • Customers are likely to recommend businesses to others if they know they have good customer care
• Customers rate customer service the #1 most important factor for 
• Customer care is the provision of a service to buyers, done before, during, and after a sale, meeting the needs of customers
  • Take account of the 4 Ps of marketing
  • Making durable or good quality product
  • Having good availability for products
  • Giving a warranty or guarantee with a product or service
  • Knowledgeable staff, helping solve problems of customers
  • Having competitive prices
  • A policy for customer care, given to all employees and public for customers to check
  • Offering loyalty cards or schemes to improve customer loyalty
  • Have a clear procedure for handling customer complaints, and making it easy for customers to file them
• Customer service has a lot of impact on an organisation
  • Helps a business meet its objectives
    • Increases sales, revenue, and profits
    • Helps grow market share
    • Greater customer satisfaction
    • Increases the business’s chance of survival
    • Gives opportunities for business growth
  • Affects customer loyalty, whether they will purchase again, increasing sales
  • Customers may recommend the business to others, to increase market share
  • Reputation of the business across all of its branches
    • Attracts better employees due to good reputation
• Dealing well with a problem, apologising or even offering compensation such as vouchers or upgrades
• Methods for maximising customer service
  • Keeping customers informed about the business
    • Creating social media platforms or showing news on website
  • Going the extra mile for customers
    • Remembering names of repeat customers to increase loyalty
    • Helping a person or giving them time to decide what to buy
• Avoiding bad customer service is important
  • Addressing customer complaints could be expensive, and the business may have to offer compensation
  • If customers talk about their experience with customer service, news about bad service is seen by twice as many people as news about good customer service
    • Businesses should take these reviews as constructive criticism, and attempt to improve themselves
  • Customer stories can be shared easily via social media, and they are often seen by many many people
  • Lost customers result in lost sales, lost revenue, lost profits, and lower market share
  • Having a bad reputation could dissuade possible customers from buying
    • A bad reputation is often difficult for a business to change
  • Lower customer loyalty makes customers less likely to buy from a business again
• Market research can be carried out to find out about customer service
  • Giving surveys or questionnaires to customers
    • Can be done via phone, written, or online
    • Easy to analyze closed questions, and text boxes for personal feedback
  • Set up suggestion boxes to allow customers to give feedback
  • Meetings or one-on-one talking with customers to gain in-depth feedback about different areas
    • Can even talk to customers before, during, after a sale

Marketing

What Marketing is

• Persuading customers to buy something
• Identify what products or services would be profitable to sell to customers
  • Often done via market research
• The government is one of the biggest spenders in the UK on marketing
  • Not to persuade customers to buy a product or service, but rather to inform UK citizens about something
• Inform customers about what the product or service is and does
• All 3 sectors of the economy use marketing

Target marketing

• Businesses need a good understanding of their target market for several reasons
  • Advertising only to people who are more likely to buy the product or service, so they spend less on advertising
  • Know where customers are geographically, so they can position their products or services in more convenient locations
• A market or marketplace: where buyers and sellers can come together to buy or sell goods or services
• Market Segmentation
  • Splitting customers into categories to group buyers together who have similar characteristics or buying patterns
  • Businesses often sell their product or service to only one or two segment of the market
  • Can be segmented by age, gender, hobbies, interests, location, education level, socio-economic groups, religion or race, income groups, lifestyle, etc
  • Market Segmentation makes it easier to target customers as groups
• Market Research

  • Many methods can be done to collect data for market research

    • Making surveys or questionnaires, or looking at surveys found by others
      • Can contain data that is both quantitative and qualitative
      • Postal surveys can be sent out in the post, online surveys can be sent out via the internet
    • Marketing calls, telephone interviews
    • Face-to-face surveys, personal interviews
      • Being able to talk to people directly
      • Could be one-to-one, or multiple people such as a focus group
      • Can make it more comfortable for people to share opinions
    • Test marketing, launching a product only in a specific area
      • Rolling it out to a larger area after test marketing goes well

  • Used to gain a deeper understanding into their target market

  • Field Research (Primary market research)

    • Gives data that is more closely tailored to the business than Desk Research

    • Getting new information first-hand

    • Pros

      • Specific to the needs of your organisation
      • Info can’t be used by competitors unless the business publishes the results of the research
      • Will be up-to-date at time of research
      • Source of information can be easily verified and trusted
    • "Describe methods of field research which could be used by an organisation." (4 marks)

    • Research conducted by the business and paid for by the business

    • A business could pay a market research agency to carry out market research for them

    • Cons

      • Takes a lot of time to prepare, gather, compile, and analyse
      • Expensive to gather, researchers must be trained and paid

  • Failure to conduct proper market research can affect a business

    • Businesses could lose money if they released a new product or services that customers did not want or need
  • "Compare desk research with field research." (3 marks)

  • Desk research (Secondary market research)

    • Pros
      • Often cheaper  than Field Research, or even free
      • Less time-consuming to carry out research
      • Can be used as a starting point for Field Research
    • Data that already exists about a market, that can be used by a business
    • Might have already been collected by the firm and repurposed: Internal sources
      • Sales figures, find out how much people are paying for products or services
      • Stock or inventory figures, see whether a product sells well
      • Historical accounting records
        • To see what times products or services sell best
      • Looking at feedback from existing customers, looking at complains or warranty claims to see how to improve a product
      • Ask sales representatives who interact with customers, customers may have given them comments
      • Market research that has been done by the same business in the past
    • Gathered by one organisation for their purpose, then reused by another organisation: External sources
      • Government publications, eg. census data
        • Known to be reliable and trusted
      • Trade directories or peer-reviewed journals written by researchers
      • Look at annual reports of competing businesses
        • Looking at their prices to see how to get customers from them
      • International publications
        • Shows how businesses are performing in different countries
      • Newspapers and magazines specific to one genre of product or services
        • Helps find out what competitors are doing
        • Displays what customers are interested in
      • Retail audits eg. List of top products or services sold
        • Shows which products or services sell well
    • Cons
      • Could be outdated or irrelevant information
      • Not specific to the business, must be adapted to fit the organisation
      • Data could be biased if taken from other organisations
      • Key data might be difficult to extract, not concise
      • Data might be insufficient, further information might be needed

  • Used to identify customer needs and wants, reduce risk in filling gaps in a market or entering a new market, and make better decisions

    • Entering new markets can be risky, but also very lucrative if it goes well
    • Doing market research well could make products or services sell much better after launching

  • Finding out what customers want to buy

    • Affected by price, quality, choice, convenience

  • Questionnaires

    • Pros
      • Cheap and easy to produce compared to a personal interview or other
        • An interviewer would not have to be trained and paid for
      • Can be a good starting point for more in-depth types of research
      • Makes sure that respondents answer the same questions
        • Makes it much easier to quantify and analyse data
        • Allows respondents to go into more depth with comment boxes, allows for qualitative data too
      • Postal surveys are easy to control where to target
      • No bias from interviewer
    • A list of questions made to get information from respondents
    • Can be made and used as field research, or published and used as desk research
    • Closed questions produce quantitative answers, open questions produce qualitative answers
    • Cons
      • Could take a lot of time to send out, wait for responses, take surveys back, analyse surveys
      • Questions could be ambiguous, the respondent may not be able to ask about the question
        • This could result in respondents submitting ill-fitting answers
      • Might not give you all the data required, not as comprehensive as a personal interview
      • If sent via post, a postal envelope must be sent for return which could be costly
      • A lot of people view these surveys as junk mail, very low response rate (<10%), so lots of money wasted if costly

  • Personal Interview

    • Pros
      • Allows 2-way communication for further expansion on answers
        • Follow-up questions can be asked
        • Interviewer can ask for expansion on answers
      • Researcher can ask respondent if they don’t understand an answer, and vice versa for questions
      • Interviewee can give far more detailed responses than in a survey or questionnaire
      • No waiting for responses to come back in, like a survey
      • If a telephone interview, both parties do not have to meet at a specific place
        • More cost-effective than face-to-face interviews, takes less time
      • Telephone interviews allow covering a wide geographic area
    • Interviews where information is obtained from face-to-face conversations
    • Cons
      • Expensive to hire an interviewer, must be trained and paid
      • Could take a long time if lots of clarification is required, or if respondent takes time to answer a question
        • Difficult to find interviewees willing to give up that much time
      • Can take a long time to find correct respondants, eg. between correct ages
        • In-person interviews would also have to arrange a time
      • Telephone interviews can commonly be seen as cold calling, low response rate
      • Telephone interviews do not pick up body language or facial expressions
      • Actions of interviewer could cause a bias in results
  • "Describe the use of market research." (3 marks)

  • Focus groups

    • Pros
      • Valuable info can be gained via discussion between participants
      • Ability to show how different people react to your product
      • Gathering info from multiple people at once saves time
    • A group of people coming together to answer questions with an interviewer
    • Having lots of people encourages discussion
    • Cons
      • If there isn’t enough variation in the participants of the focus group, not much info could be gathered
      • Peer pressure or conformity could cause people to change their answers from what they truly think
      • Discussions or arguments could be difficult to control, some might not get a say

  • Test marketing

    • Pros
      • Allows for businesses to test a new product or service with lower risk
      • Indicates the segment of the market that buys the product or service most
      • Allows for modifying product or service before it launches fully
    • Giving a prototype product or service to a small area
    • Expanding to a larger area if testing goes well
    • Cons
      • Could be costly to carry out
      • Might be a waste of money if the product is released in the wrong area

Marketing Mix

• Product

  • Research & Development happens once the business knows that there will be demand for the product
    • Test Marketing can be done on a diverse group of customers for experimental products
      • Afterwards, the prototypes can be changed to make the product less likely to fail after it gets mass-produced
    • The business will also often produce prototypes - product versions that are usually incomplete but can be experimented with before mass production
    • At this stage, the product can be tested and changed to increase usability or make it easier to mass produce
  • Product benefits are the advantages that customers get from buying the product
  • Branding

    • Features of a good brand

      • Should be unique and distinctive, stands out from others
      • Should suggest quality, helps customers to see the brand as more worth purchasing
      • Should be memorable and easy for customers to suggest to others
      • Should be transferable onto different products, and be able to fit with the design of newly introduced products

    • Pros

      • Helps stand out from other products on the market, attracts customers
      • Makes the product more recognisable to customers and helps to build brand loyalty with them
        • Could reduce advertising costs if the brand is recognisable
      • Can signal that the brand is quality, allowing for charging a premium price
      • Helps the business compete with others better
      • Can allow the business idea to be more easily extended to new products
      • The brand itself can become valuable, as there could be a loyal customer base behind it
        • Recognisable brands can become status symbols, which helps to increase sales
      • If a brand is strong, customers may already know your brand, meaning less needs to be spend on marketing.

    • Building a name around your product, to give it more value to the customer

    • A symbol, design, feature, or name that differentiates a product from others

    • The term “Branding” originates from when farmers added markings to their cattle to be able to tell them apart from other farmers’ cattle

    • Own branding: often supermarkets releasing products under the same brand as the supermarket, sometimes offering better value

    • Brand extension

      • Being able to extend a brand name onto other similar products, in order to target different market segments
        • Targeting more customers can help to increase the business’s sales
      • When a company decides to introduce more brands into an already existing category
        • Sometimes also referred to as “multi-branding”
      • Already having a successful brand makes it easier to extend to newly introduced products, as they can appeal to the same customer base
        • It can be more costly and take longer to establish a new brand name rather than using an existing one
      • Having one product gain a bad reputation could damage multiple subsidiary brands and cause fallout across the entire organisation
      • Product mix / Diversification
        • Businesses can produce several products, in order to reduce risk of the business going bankrupt if one product does badly
          • Sales of other products can keep the business afloat if a few products fail
    • "Outline the possible drawbacks of developing a brand name." (3 marks)
    • "Explain the benefits to a business from having a strong brand." (3 marks)

    • Cons

      • Marketing a strong brand image can be extremely costly
      • Bad publicity can damage a business a lot more due to having a bigger image
      • It can take a long time to build up a strong brand in public consciousness
      • Brand imitation can be difficult to prevent, which may cause confusion between them or tarnish either brand.

    • Brand loyalty: when consumers try a brand and continue purchasing from it

      • Customers may believe the product is higher quality or better value than alternatives
      • There may be few competitors to the brand, lack of alternatives
      • Customers may be comfortable with a brand, or have had good experiences with it
  • Stages of product development - GAPTAP
    • Generate ideas
    • Analyse ideas
    • Prototype production
    • Testing of product
    • Alter the product
    • Production for sale
  • Packaging

    • Helps to present the good or service to the customer

      • Could inspire a sense of quality for the product

    • Can protect a product during transportation

      • Makes sure that the product arrives fresh, intact, or secure
    • "Discuss the advantages and disadvantages of packaging to an organisation." (3 marks)

    • Keys to effective packaging

      • Be informative: say what the product is clearly, display nutrition information, ingredients, or where to get help
      • Promote the brand by a logo or iconic design
      • Attractive to customers with bold or unique design
      • Should be convenient: stackable to have more on store shelves, and packaging should be cheap to produce
      • Sustainable: recyclable and able to be produced without high emissions
  • Products have to meet consumer needs and wants
    • Customers won’t purchase products that they don’t need or want
    • Designing or producing a product that will result in no sales can be a waste of resources
  • Possibly the most important part of the Marketing Mix
    • No other factor matters if there isn’t something to sell
  • Product life cycle

    • Introduction

      • Right when the product hits the market, sales will be slow at first
      • Often this is when advertising costs are highest, to get the brand name into public consciousness

    • Growth

      • Sales begin to increase rapidly, people are becoming more aware of the product

    • Maturity

      • Sales begin to level off, as customer loyalty is already established
      • Doing further advertising usually has less effect, as the brand is already well-known

    • Decline

      • The product lifecycle can be extended by changing elements of the marketing mix, but these can be expensive
        • Product
          • Alter or improve the product based on customer feedback
          • Appeal to a different market, could be by changing its name
          • Market the product again differently, possibly to appeal to a different market segment
          • Find a new use for the same product, meaning that customers may use the product more, increasing sales
          • Introduce variations on an existing product - extend the product line
        • Place
          • Alter channels of distribution, changing where the product is sold to increase the potential market, like moving commerce to the internet
        • Price
          • Changing price of a product according to competitors to encourage more sales
          • Lowering price of a product to push competitors out of the market, “destroyer pricing”
        • Promotion
          • Changing media of advertising, to reach different segments of the market
          • Changing promotion strategies, by getting celebrity endorsements or offering special offers
      • Sales begin to go down, usually due to changes in the market or other external factors
      • Customers may choose products from competitors instead
    • "Outline stages of the product life cycle." (4 marks)

• Price

  • Why price is important
    • Prices that are too high may not attarct enough customers and they may choose a cheaper competitor instead.
    • Prices that are too low might not make enough profit for the business to survive
    • Selling a product for the wrong price can cause the business to lose customers or be unable to attract them.
  • Product pricing
    • Low price
      • Helps to attract a high volume of sales
    • Market price (average)
      • Earn more profit, but have to find different ways of competing with other businesses
    • Premium price (high)
      • Sometimes can cause the product to be seen as higher quality than others on the market
  • Factors that impact price
    • Competition
      • Having a similar product to customers means that it must have the same or lower price to succeed
    • Economics
      • Prices rise during times of economic boom
      • Prices will lower during recessions
    • Costs of making the product or providing the service
    • Supply & Demand
      • High demand increases price of the product, low demand decreases price
      • Short supply increases price of the product, high supply decreases price
    • Stage in the product lifecycle
      • Prices usually increase during stages of growth
      • Prices usually decrease during stages of decline
  • Pricing startegies
    • Cost plus pricing
      • Cost to complete the job is given, and a markup is added
      • Often used by tradespeople or construction firms
    • Penetration pricing
      • Where prices start low when the product is in its introduction phase
        • Used to make a large volume of sales quickly, to establish the brand
      • Prices are later increased when a large enough market share has been gained
    • Price skimming
      • The opposite of penetration pricing, starting high and gets lower over time
      • In some products, more profit can be gained from early buyers being able to pay more
      • Lower prices can make the product more accessible to customers, as the product may be nearer the end of its lifecycle
    • Promotional pricing
      • Prices being lowered for short periods of time, encourages more sales
      • Can encourage demand for new products, or for products that are declining in sales
    • Loss leaders
      • Deliberately pricing products so low that they make a loss on the product
      • A form of promotional pricing used to boost sales
      • Only some products will be loss leaders, to help the store to be seen as good value
    • Destroyer pricing
      • Prices set low in order to steal sales from competitors and push them out of the market
      • Only done for a short time until competitors have gone out of business, unsustainable
      • Other businesses leaving the market increases the business’s market share
    • Hour-based pricing
      • Customer is charged a standard price per hour
      • Sometimes used by car garages, based on time taken for service
• "Describe elements in the Marketing Mix." (4 marks)

• Place

  • Relates to where a product is sold
  • Also relates to how a product gets to a customer
  • Aspects to distribution
    • Transport
      • Road
        • Door-to-door delivery is available without having to change transport methods
        • Buying road vehicles is cheaper than buying air or rail or sea transport
          • Firms can use their own fleet of vehicles rather than relying on others
        • Traffic, weather conditions, and breakdowns may delay transportation of goods
        • Inefficient compared to other methods of transport
        • Truck drivers can only drive a maximum number of hours in a day
      • Rail
        • Fast and cheap over long distances, often used between towns or cities
        • Blockages, traffic, and breakdowns are less likely to happen with rail
        • Not good for reaching specific out-of-the-way areas, can only stop at railway stations
        • May be more costly than road transport
      • Sea
        • Efficient and cost-effective for carrying heavy and bulky loads
        • Can travel very long distances between countries
        • Slower than other methods of transport
      • Air
        • Extremely high speed, can fly very long distances between countries
        • Useful for products that need to be transported quickly eg. perishable, urgent, valuable goods
        • Cargo cannot be too heavy
        • More expensive than other types of transport
        • Can only stop at airports, bad for reaching out-of-the-way destinations
    • Businesses have to plan carefully to choose the most efficient option
    • Channel
      • The means by which an organisation and its customers are brought together at a place and time to buy and sell goods
        • Relates to where the product was made initially, and the process it goes through to get to the consumer
      • Businesses may manufacture the products themselves
      • Organisations in the distribution chain
        • Manufacturer
          • The firm that makes the products
        • Wholesalers
          • Sometimes firms that purchase from manufacturers in bulk and sell on to retailers
          • Wholesalers and retailers are known as Intermediaries
        • Retailers
          • Firms that sell the product to the final customers
      • Products may go through a wholesaler then retailers
      • Manufacturer-Wholesaler-Retailer
        • Retailers buy goods from wholesalers, who buy from the manufacturers
        • The traditional channel of distribution
        • The manufacturer could own both the wholesaler and retailer as well
        • A wholesaler will buy products in bulk from many different manufacturers 
      • Choosing a channel
        • If a product is cheap to produce and high in demand, it can be supplied to retailers
        • Perishable products need to go through the channels quickly, wholesalers would be too slow
          • Farm shops work well as a direct-to-consumer model, so customers get the freshest product
        • Mass market products, those without a clear target segment, are often sold to wholesalers
        • Nmall or niche markets are sold through agents or directly to customers
        • Methods must be cost effective and fast to get products to the market
      • Manufacturer-Retailer
        • Retailers buy directly from manufacturers
        • Works best when retailers have a large area for storing goods
      • Direct-to-consumer
        • Often sold by mail order or online
        • Manufacturer sells goods directly to the consumers
    • Location
      • Businesses may want competitors to be located away from them
        • This prevents other businesses from being able to steal customers from them
      • Businesses may want to be located near their competitors
        • The area may already have an established customer base, so setting up a new business may have a higher chance of attracting customers
      • Cost and type of land
        • Premises in cities are more high-traffic, but are often more expensive
        • Larger areas of land are more expensive
      • Location of raw materials
        • Businesses that depend on bulky or perishable raw materials will be set up near the source of them to save on transportation costs
      • Distance to the market
        • Businesses that offer services to customers tend to locate close to their customers
        • Sellers of perishable products want to be located closer to their customers, so they will receive a higher quality product
      • Transport costs
        • Transport costs depend on distance to market, method of transport, and bulkiness of the product
      • Availability of Labour
        • Almost all businesses want to locate close to where they can employ workers with the skills they need
        • Businesses don’t want to constantly re-train candidates
        • Allows employees to come into work faster
      • Infrastructure
        • Beneficial to the business for several reasons
          • Allows for employees to get their lunch faster if there are shops nearby
          • Allows staff to be able to commute to work easier if there are good transport services
          • Allows the business to be able to transport products easier
        • The basic facilities that operate in an area, including roads, utilities, services, communications
      • Local Council grants and regulations
        • Councils might offer lower business rates or provide grants in order to get more businesses in the area
        • Ease of gaining planning permission and availability of industrial estates are key factors
      • Central Government
        • Grants and loans are also given out by the government to help businesses create jobs
          • Helps to train staff, reducing costs for the business
          • Can help to purchase property or machinery
          • Relocation grants can be given as an incentive to move the business to their city

• Promotion

  • All about getting a product infront of a customer
    • To inform them and persuade them to purchase something
  • The UK government is one of the largest spenders on advertising: not to promote, but to inform
    • Private sector businesses usually use promotion to encourage product purchases
  • Sales vs Marketing
    • Sales is persuading customers that a product is what they want
    • Marketing is identifying and predicting what customers want and need
    • Sales is about convincing a customer to purchase a product
    • Marketing is a larger area and involves fulfilling customer needs and planning how to
  • Sales promotion
    • Sponsorships
      • At large events such as football matches
      • At local levels
    • Special offers
      • Buy one get one free, 2 for 1, 10% extra free, etc
    • In-store demos or tastings
    • Price reductions
      • Clearance due to store closure
      • Discounts for almost out-of-date products
    • The various ways that a business can get customer sto buy a good or service
    • Free gifts or samples
      • Delivering to someone’s house
      • Free samples in stores
      • People who receive free samples are more likely to purchase a product
    • Celebrity endorsements
    • Competitions or giveaways
      • Requires giving away a product or other prize
    • Loyalty cards
      • Incentivises the customer to come back multiple times with products or points
  • Technology in promotion
    • Databases
      • A central place to store information
      • Can store and search for info about customers
    • Electronic Point of Sale (EPOS)
      • Information collected at the till, records of when products were sold and at what time
    • Loyalty cards
      • Matches products purchased against info about the cardholder
      • Can be used to offer coupons only for items the customer buys
    • Datamining tools
      • Used by businesses to find info about a customer’s browsing sessions
      • Can help them to target personalised ads to customers
      • If a customer has been searching for a product, advertisers will pay to get you to see their ad as a likely customer
    • E-commerce
      • A term for online selling, as when something is bought online it requires entering of personal info
      • Allows businesses to profile customers and contact them for market research
    • Social  media
      • Social media collects lots of information about you, so it’s a good plase for advertisements
      • Allows businesses to communicate and build relationships with customers
      • Helps to build customer loyalty by responding to complaints or queries
      • Can act as a way of sharing posts, more so than word of mouth
      • Allows easier reaching of niche audiences
  • Ethical Marketing
    • Behaving in a way that doesn’t cause harm to society, and in an acceptable way
    • Doing the right thing, even when nobody is watching
    • Brands are more likely to be successful if they promote ethical values
      • This causes customers to trust them more
    • Advertising standards
      • Adverts must not mislead the customer, and must do as it promises
      • They cannot be obscene or indecent
      • Must not offend moral sense or beliefs of customers
      • Have to follow discrimination legislation

Operations

What Operations Are

• Manufacturing and producing a product
• Making packaging
• They work with other departments
  • Working with finance in order to purchase raw materials

Purchasing Mix

• The factors to consider when choosing a supplier
  • Managers of operations must manage these factors correctly
• Quality of the product
  • Quality must also be consistently high
• Quantity they will be able to supply
  • Whether they are able to meet demand
  • If it is possible to get discounts from bulk buying
• Price of supplies
  • Credit terms (buy now, pay later) could be an advantage
    • Supplier will do a credit check before offering credit
    • Credit usually lasts 30 days before having to pay
    • Can help with cash flow in a business
  • Price must fit within a business’s budget
• Location and delivery time/lead time
  • Using local suppliers can decrease delivery time and environmental impact
  • Supplier should be reliable, lead times shouldn’t be too short or long

Methods of Production

• Job production

  • Where a company produces a single product or a small number

  • Pros

    • Allows for designing a unique product or service
    • Individuality lets a product be produced to a customer’s taste
    • Workers can feel more motivated, as they are involved in the product from start to finish

  • Could be a one-off job to meet a particular set of requirements

  • eg. A designer dress or kitchen, a house build, a custom art piece

  • Cons

    • Jobs can be more time consuming as each one is different
      • This makes it more difficult to take advantage of efficient production systems
    • Staff may need to be specially trained and highly skilled, increasing labour costs
  • "Give an advantage and a disadvantage of the method." (2 marks)
• Batch production
  • eg. Baked goods, clothing, shoes, tinned paint
  • Pros
    • Each unit is more cost effective to make
    • Many products can be made at the same time, easier large-scale manufacturing
    • Higher flexibility compared to other options
  • When a group of products are made at the same time
  • Once the first batch is finished, changes may be made before a second batch begins
  • Cons
    • Machinery may need to be reset or changed before each batch
    • Meeting customer requirements can be more difficult
    • It can be expensive if lots of small batches need to be made
• Flow production

  • Each product is identically made, and will pass through multiple production stages

    • After a stage is complete, the product will move onto the next
    • Products can be transported through stages via conveyor belt

  • Where each product is made in a continuous process, on a manufacturing line

  • Pros

    • Cheapest per-unit production cost
      • Machinery can easily be used to automate processes and increase efficiency
    • Works best when demand for a product is constant
    • Each customer will receive consistent quality, products are identical
      • Quality control checks can be built into a production process
  • "Discuss the advantages and disadvantages of flow production." (4 marks)

  • eg. Soft drinks, mobile devices, tinned foods, vehicles

  • Cons

    • Exact requirements cannot be met for products
    • Setting up lots of machinery is very expensive
    • Employees may become unmotivated if they are doing repetitive tasks

Quality

• There are 3 main aims relating to quality
  • Quality of raw/supply materials
    • When ordering raw materials, a business can provide a quality specification to a supplier
    • The supplier may show proof of the grade of ingredients used
  • Customer Service and After Sales Service
    • Offer quality advice on products and services
    • Offer high quality after-sales service, answering customer questions after a product is bought
    • Extended warranties or free servicing can be provided
    • Have knowledgeable staff that are able to answer customer queries accurately
  • Production process
    • Quality assurance
      • eg. the Red Tractor logo, showing that food has been produced to a safe and high standard
        • Standards must be met and the entire process must be inspected before the logo is added to products
        • Random checks can be used to check for continually meeting standards
      • Products on a production line may be randomly checked to ensure they meet quality requirements
    • Quality circles
      • Small groups of people in an organisation, communicating about how to improve quality
        • Being part of a change increases motivation and increases likelihood that quality will actually improve
    • Quality control
      • Products are checked after they have completed production, any products that do not meet requirements are discarded
        • This can result in high wastage of products if lots do not meet the requirements
    • Benchmarking
      • Finding out the best techniques currently used in the market and copying them 
        • Setting high standards to copy and improve on other ideas
        • Discard products that do not meet benchmarks of competitors
    • Quality management
      • No faults will be made, all staff must ensure that work is perfect and are responsible for quality
      • Products are checked at every stage of the process
        • Work processes are constantly reviewed and improved on
        • Mistakes are caught quicker and fixed easier
    • Quality inputs
      • Ensuring quality of raw materials with a product specification, ensuring a required quality level
      • Increasing quality of raw materials reduces waste and increases quality of end product
        • Low quality materials can slow down or damage machinery
        • High quality materials also increase motivation of staff
          • Highly motivated staff also increase product quality
      • Well-trained, motivated, and skilled staff will help to create better products
• Training staff to high standards and using up-to-date machinery can also help to increase quality
• Gucci’s motto is “The quality is remembered long after the price is forgotten”
  • Shows that it can be worth spending more on a high quality product
  • Also shows that it’s worth it for a business to invest in good quality, even if the price tag increases

Human Resources

Deals with issues relating to management of staff in an organisation

• Recruitment and selection of employees
• Keep up safe working conditions
• Ensuring workers receive correct pay
• Promoting good working relationships
  • Helping to increase staff morale
• Training and motivating employees

Recruitment

• Finding a correct candidate
  • Ensuring workers have proper skills and qualifications
  • Person needs to fit in with the organisation
  • If correct candidate is found, they help the business meet its aims and produce good quality goods/services
• The recruitment process

  • Identifying job vacancy

    • Ensuring the vacancy actually exists, a role has to be needed and warrant paying a wage
    • Vacancy may exist because of a promotion, retirement, or a person finding a new job
    • The organisation may be expanding, and require additional staff

  • Carry out job analysis

    • Ask the previous worker what they do, to help find out their duties
      • If worker is not available, ask line manager or subordinates
      • Could observe the worker before they leave
    • Find out what the person would do in a day-to-day role
    • Identify tasks, responsibilities, and duties, as well as skills required

  • Prepare a job description

    • A document that details tasks and duties of the job
      • Working hours weekly, flexible or WfH
        • Holiday entitlement (standard is 4 weeks)
      • Includes job title and department
      • Pay that the person would be given
        • Benefits and other arrangements
      • Responsibility or authority the person has
    • Job description is sent out to applicants to help them find out if the job is for them

  • Prepare a person specification

    • Another document sent out alongside the job description
    • Details the type of person that is best suited to the role
      • Categorised into “essential” and “desirable” characteristics
        • Essential characteristics are skills or qualities that the candidate must possess
        • Desirable characteristics are skills or qualities the business would like the candidate to have
      • A list of attributes a successful person would have
  • "Outline stages of the recruitment process." (4 marks)

  • Advertise the vacancy

    • Jobs can be advertised internally, to promote people from within the business

      • Advertising vacancies to existing employees
        • Internal emails, bulletins, intranet, notice boards  can be used to advertise positions
      • Pros
        • Strengths and weaknesses are already known
        • Candidates already know the structure of the organisation, don’t require retraining
        • Internal candidates are cheaper to recruit, expensive adverts are not required
        • Internal recruitment can help improve employee morale, as they are able to develop
        • Internal recruitment is faster to find a new candidate, as many CVs/applications don’t have to be compared
      • Cons
        • Could exclude some people from applying, better quality employees could be outside the organisation
          • Limits candidates to those already employed
        • A promoted employee will leave a vacant position which must be backfilled
        • Business does not benefit from outside experience or new ideas from new employees
    • "Compare the use of internal and external methods of recruitment." (2 marks)

    • Adverts should be short, accurate, and descriptive

      • Include benefits as well, a job advertisement is still an advertisement
      • Adverts must be clear about how to apply or register interest

    • More commonly, jobs can be advertised externally, to bring in new candidates

      • Pros

        • A wider pool of applicants to select from
        • Brings fresh opinions, skills, and ideas in from outside
        • Backfilling vacancies is not required

      • Cons

        • Takes more time for a worker to settle in, induction training is required
        • Employees may require a lot of traniing depending on the job
        • External recruitment can be slower, as advertising and comparison of applications is required
      • "Justify the use of external recruitment." (3 marks)

      • Advertising vacancies to the general public

        • Recruitment agencies specialise in matching candidates to jobs
          • Often used by cleaners or construction workers that need special qualifications to work
        • Newspaper adverts can reach a wide audience, but can be expensive
        • Online advertising is very common now, with websites like indeed or s1jobs
          • Sites exist to help find jobs in specific areas or fields

  • Send out application forms

    • Should collect only the relevant information from candidates
      • This makes it easier to compare 2 applicants
      • Could be legally required due to GDPR
    • These will ask for address, education, qualifications, experience, interests, hobbies, references
      • References is asking a previous employer to comment on performance
        • Employers will often not give lots of information, possibly only confirming dates that the person worked there
• Methods of Selection
  • References
    • Previous employers can give information about the candidate, regarding their suitability
    • Even simply ensuring that the candidate actually worked for that company
  • CVs or Application forms
    • Written details about a candidate that can be compared against a person specification and job description
  • Interview
    • Successful interviews will give candidates an opportunity to provide good answers
      • Interviewers should listen to candidate’s answers and answer follow-up questions
        • Too many follow-up questions can be difficult for interviewees
    • Interviews allow candidates to ask questions about the organisation
      • A candidate asking questions that prove they have researched the organisation is beneficial
    • Face-to-face meeting with applicants where more detailed questions can be asked
    • Pros
      • Allows for asking more detailed questions and giving more detailed answers
      • Allows for getting a feel of the applicant’s personality and appearance
      • An opportunity for asking questions about items on their CV
    • Cons
      • Interviews can be time-consuming, especially if there are many candidates to interview
      • Some applicants don’t perform well in an interview, and isn’t a good reflection of their performance
      • Interviewers’ bias may exist, intentional or unintentional, for candidates
  • Psychometric testing
    • Personality tests to confirm whether a candidate is good for a job
    • Links to person specification, allows for recruiting the correct person for a role
    • Aptitude testing
      • Could test mechanical or mental ability
        • Used in software development to ensure someone is able to write code
        • Could be simple tests, like ability to send an email
      • Determines the level of skill that a person has
    • Usually used for jobs where personality is important for the job eg. salespeople
  • Group interviews or discussion
    • Allows for seeing how candidates interact with eachother
    • Candidates discuss with other candidates, checking on interpersonal skills
      • To test who comes out as a leader and who tends to stay quiet
  • Team building exercises
    • Giving them a problem and seeing how they solve it
    • Testing how candidates perform while working in a team
      • Also testing interpersonal and communication skills
  • Role play
    • Candidates act out a scenario, showing how they act in different situations
    • Scenarios could be dealing with a difficult customer or being on a phone
      • Designed to show strengths and weaknesses of the applicant
  • Giving a presentation
    • Candidates are given a topic and time limit in advance
    • The presentation is given to a panel
      • Good body language and smart appearance is essential
      • The panel will also ask questions at the end of the presentation
• Stages of selection
  • Appointment
    • Once interviews have completed, you will be informed on whether you were successful
    • If the candidate refuses the position, they can offer it to another candidate or re-advertise the position
  • Contract of Employment
    • An employee must be provided with a contract of employment (Written Statement of Employment Particulars)
      • The contract includes how pay is managed, how many holidays are given, notice periods (time given before leaving), sick pay, etc

Training

• Benefits of training staff

  • Allows the firm to keep good staff
    • Offering training gives them something else they may be good at, shows the employee the business believes in them
  • Allows firm to sell a better product or service
  • Improves efficiency of staff
    • Showing staff the best way to do something, effective ways to operate something
  • Having good staff increases customer loyalty
  • Improves motivation
    • Staff will feel more valued by the organisation if they are given training
  • Keeps workers’ skills up to date
  • Improves staff flexibility
    • Allows staff to be more useful, letting them work in different departments

• Businesses train their staff so that they remain competitive and stay good at what they do

• Downsides of training staff

  • Training courses can be costly
  • Training can take time to complete
  • While employee is being trained, work is not being done
• "Explain the benefits of training staff." (3 marks)

• Types of training

  • Induction training
    • Given to all employees after joining
    • May include info like tours of the premises, workplace rules, etc
    • Could include health and safety
    • Helps the employee to settle in to the workplace
  • On-the-job training
    • Pros
      • Inexpensive to carry out
      • Employee learns in the workspace, in the same conditions that work is performed
        • Allows for easier application of skills
      • Can motivate workers delivering training
    • A more experienced member of staff will coach a new member of staff
    • Sometimes called “Sitting next to Nellie”
    • Cons
      • Bad habits may be picked up from colleagues
      • Trainer might be a bad teacher
      • Often there isn’t a peaceful environment to learn and practice
    • Takes place at the normal place of work, while doing the job
  • Off-the-job training
    • An apprenticeship is a mix of on-the-job and off-the-job training
      • Every so often, an apprentice may be sent to a college to gain actual qualifications
    • Can be provided at a college or specialist training centre
    • Cons
      • Costly for organisations
        • May require accommodation, travel expensive, training fees
      • May be difficult to transfer skills to the workplace
      • Could require cover for training days
    • Pros
      • Specialist instructors are available, specialising in both teaching and in the subject
      • Doesn’t have the pressure of a working environment, allows for better-paced working
      • Allows for gaining a qualification or certificate

Motivation of Staff

• Benefits of staff motivation
  • Motivated employees work harder
    • Increases quality of products produced
  • Decreases staff turnover, and staff are retained for longer
    • Taking new staff on is costly and takes time, especially if training is required
    • Staff are more experienced if they have been in the business for longer
  • Staff may provide better customer service
    • This helps to increase the reputation of the business
• How to motivate staff
  • Good pay and conditions must be required
    • If a staff member finds a position with same conditions but better pay, they will leave
  • Provide a welfare policy, possibly in an employee handbook
  • Provide training for staff
    • Staff may be given a certificate or award for completing training
      • Makes the staff member a more employable person
        • Could be risky, they must encourage the member to stay with the business to prevent losing investment of training
    • Staff will feel like they know what they are doing, 
  • Have a robust grievance and disciplinary processes and policies
    • Disciplinary methods usually follow a standard process: verbal, written, and final warnings, then dismissal
• Financial
  • Time-rate
    • Paid an hourly rate, eg. minimum wage
    • Encourages an employee to work for a longer time
  • Piece-rate
    • Paid an amount for each product produced
    • Might be paid a base rate plus more for each product produced
  • Bonus
    • Additional payment for reaching a target that was set
    • Motivates an employee to reach a target or deadline
  • Commission
    • Percentage of a sale made is given to the employee that made that sale
    • Paid on top of a salary or wage
  • Overtime
    • Higher rate of pay given for working beyond contracted hours eg. Time and a half, double time
  • Salary
    • Paid an amount for the year, given 1/12th monthly
• Non-financial
  • Company car
    • A car given to an employee to use for both business and personal purposes
  • Offering pension or insurance
    • All employers now have to contribute a minimum amount to pesion
    • Some offer medical insurance (for private healthcare) or life insurance for staff
  • Vouchers or discounts for food or company canteen
    • Some employers py for lunches or provide canteen facilities where employees can buy meals for reduced prices
  • Childcare vouchers or crèche schemes
    • Allowing employees to claim childcare vouchers
    • Larger businesses may offer crèche facilities within the building
  • Flexible working practices
    • Allowing employees to work more flexibly, like job share, flexi time, working from home/teleworking
      • Job share: a full time job shared between 2 or more people
      • Flexi time: varying start or end times for a job
      • Condensed hours: Taking more hours per day to have a day off
      • Working from home may allow the employer to reduce costs on office space
    • Employees know they are trusted by the organisation
  • Often given in a job description as benefits
  • Employee of the month
    • Recognising and rewarding employees for increased effort
  • Providing traniing opportunities
    • Increases future career prospects for employees
    • Employers offer training programmes which motivate staff by making them feel valued
    • Sometimes called CPD (Continual Professional Development) or CLPL (Career-Long Professional Learning)
  • Employee participation
    • Involve them in decisions made by managers, eg. democratic styles of management 
      • Consult them in future plans, giving them warning of change, helping them feel prepared
    • Recognise good performance
      • Make sure employees feel their contributions to the organisation are valued
    • Encourage training
    • Positive appraisal system
      • Showing employees what they are good at rather than tearing them down
    • How  to make employees feel positive and secure about their position and job
    • Let them work as a team
      • Can help contribute to decision-making process, share ideas, and split a workload
    • Treat them like people and with respect
    • Quality circles
      • Allow employees from different departments and levels of management to come together and discuss how to improve quality levels

Employee relations

• How the human resources department deals with those employed by the business
• Industrial relations
  • Trade unions represent employees locally and nationally in discussions
    • Negotiations with employers is called collective bargaining
    • Bargain with employers for better pay, working conditions, or terms of service
    • Assist with grievance procedures and give legal advice to members
      • A grievance is a formal complaint taken out against an employer
    • Members pay a subscription to be a member of a union
  • Employees have to follow legal requirements and use correct channels of communication
  • Management informs, negotiates, and consults with employees and unions or representatives
    • Hold regular meetings with staff to discuss changes and decisions with employees
    • Meeting with union representatives, having employee representatives on management teams
  • Works councils
    • Made up of an equal number of representatives from employees and managers
    • Discuss matters affecting the organisation, including impact on workers
    • A good way of getting employers and employees together for discussion
    • Agree the terms and conditions of employment if there is no works council
  • Industrial Action
    • Types of industrial action
      • Sit in: Going to work not doing any work
        • Done to stop production, taking up space in the building
      • Overtime ban: working only contracted hours, not working overtime
        • Much less work gets done, rush orders don’t get fulfilled
      • Go slow: Doing the same work, but at a slower rate
        • Orders are not fulfilled on time, much less work is done
      • Work to Rule: Only undertaking tasks that are written in contract, nothing else
        • Done when employees are being overworked and not being paid correctly for it
      • Strike: Refusing to enter the workplace, last resort industrial action
        • Employees may demonstrate or create a picket line, discouraging other workers from entering
        • No work gets done, no orders get fulfilled, no sales are made
    • Only happens as a last resort, when there has been a breakdown in communication between employers and employees
    • Designed to cause disruption to a business and put pressure on an employer
    • Only happens when unions or works councils have not reached an agreement
      • Done to try to force the business to fix something
    • Affects to employer
      • Pros
        • Allows for introducing new procedures, to avoid future conflict
        • Gives opportunity for the relations between employer and employee to improve
      • Cons
        • Results in massive losses in productivity
          • Impacts sales due to there being less products to sell
        • Draws attention to the business, resulting in bad publicity
        • Causes a reduction in staff morale
          • Industrial action sometimes must be taken constantly to result in change
          • Staff morale requires hard work to rebuild
    • Affects to employee
      • Pros
        • Forces the business to take complaints seriously
        • Relationships should improve once an agreement is reached
        • Industrial action cannot continue forever, so the issue must be dealt with eventually
      • Cons
        • Employees do not get paid while on strike
        • Lack of production may mean loss of customers, so jobs may be lost

Technology

• How technology can be used to enhance the function of HR
• Websites can be used to advertise job vacancies, and show job description and person specification
• Video conferences can be used to conduct interviews, decreasing need for travel
• Electronic diaries or calendars can be used to manage staff time, meetings, and appointments
• Allows for online completion of applications and psychometric testing
• Databases can be used to help keep employee records
  • Can also be used to keep applications of previous applicants for follow-ups
  • Must comply with data protection regulations (GDPR)
• Email can be used to contact job applicants or staff
• Staff can use online working to reduce office costs
  • Allows for contacting staff out-of-hours for urgent requests
• Word processing/desktop publishing can be used to make job adverts and application forms
  • Can also be used to write letters to applicants more effectively

Employment & Marketplace legislation

• Health & Safety (Display Screen Equipment Regulations) 1992
  • Sets out what employers have to do for health and safety of employees sitting infront of screens for long periods of time
  • Computer chairs should be adjustable and footrests should be provided
  • Adjustable monitors should be provided for changing height, angle, and brightness
  • Employers have a legal requirement to provide eyesight testing and glasses if required
• Health and Safety at Work Act 1974
  • Employers must
    • Take reasonable care to ensure health safety, and welfare of all employees
    • Ensure machinery is  maintained properly
    • Make sure that any  hazardous substances are dealt with effectively
      • May need waste licenses to dispose of certain materials
    • Ensure staff are well trained and informed of potential dangers
    • Make sure that the work environment  is safe
    • Provide PPE (Personal Protective Equipment) if required
  • Places responsibility on both the employer and the employee
  • Employees must
    • Take reasonable care to ensure their own safety as well as the safety of others
    • Take responsibility for their own actions
    • Cooperate with the employer’s rules on health and safety
    • Attend Health and Safety training provided to employees
    • Wear PPE that is provided by the employer
• Employment Rights Act 1996
  • Gives the  right to a written contract  of employment
    • Must be provided within 12 weeks of employment
    • Often called a Written Statement of Employment Particulars
  • To protect people from being treated badly at work by their employer
  • Employees must not be unfairly dismissed
    • Workers must be given a notice of several weeks before being sacked
    •  Must also be given redundancy pay
      • Calculated based on age, salary, and employment time
  • Both employer and employee have a right to a notice period for ending a contract
    • Most  jobs have a notice period of 4 weeks, could be much longer for more specialised jobs
  • Employers must provide an itemised payslip,  showing exactly where money is coming from and going
  • Right to a set amount of paid holidays
    • 28 days at minimum for full-time employees, some offer more as a perk
    • May increase for longer employment time
    • Part time employees have a right to pro rata holidays, meaning holidays are proportional to hours worked weekly
• Equality Act 2010
  • If 2 people are doing the same job, they are entitled to the same pay and employment terms
  • People doing the same job should have the same opportunities for promotion
  • Sets out protected characteristics to prevent discrimination
    • Age, race, sex, sexual orientation, disability, religion/belief, gender, pregnancy, marriage
  • Recruitment and selection processes cannot discriminate against protected characteristics
  • Employers must make “reasonable adjustments” to adapt a workplace to employees
    • If an employer is unable to accommodate an employee, they would be in the right
• National Minimum Wage Act 1998
  • Sets out the minimum amount of money an employer can play an employee per hour
    • Covers every worker, no matter their contract
  • National Living Wage is not enforcable by law, but many organisations pay their employees this
    • Encourages busenisses to give their employees a higher standard of living than the living wage

Finance

Cash Budgets

• Managing cash flow, ensuring the organisation never runs out of cash
  • Ideally make a profit as well
• Businesses have to decide how payments and receipts (income) are managed
  • Organisations may also need to know in advance whether they will have to borrow to make payments
    • Can forecast when loans or overdrafts will be necessary
• A cash budget shows how much cash is available to an organisation on a monthly basis
  • Also shows how much money will come in and go out during a period of time
  • Used to help make decisions about expenses
    • Shows the best times to purchase the new assets
  • Alerts businesses to future cash flow problems
• Methods of improving cash flow
  • Raise more capital: Re-invest profits, issue shares, or receive more investments from owners
    • By raising more capital, the business earns more cash
  • Taking out loans: Can be done from a bank or other institutions
    • Small organisations may be able to take out money from family and friends
    • Repayments would have to be made with interest
  • Tighter credit control
    • The business should collect money owed by Trade Receivables (debtors) quickly
      • Offer discounts for money being repaid faster
    • Improves inflow of money to an organisation
      • Can cause bad feelings with customers
  • Sale and lease back: Selling fixed assets to a leasing company, then renting them back
    • Regular payments will have to be paid to the leasing company
  • Spread purchase costs: Use hire purchase or leasing
    • Outflow of cash doesn’t happen all at once
  • Tighter stock control
    • Making sure not too much stock is on hand
      • Stock requires money to keep, but doesn’t earn any until sold
  • Check credit worthiness of customers
    • If a customer is unable to repay, this is bad debt: it will never be repaid
    • Checking credit score before offering a hire purchase or loan

Sources of Finance

Income statement

• Not to be confused with a Cash budget

  • A cash budget is a plan for the future, an income statement is an overview of the past

• What has happened in the previous year in the business, and how they have profited

• Purpose of an income statement

  • Shows the financial details of the organisation in a snapshot of time
  • Referred to as a historical document, looks back in time
  • A legal requirement for private limited companies to file with companies house
  • Identifies whether the organisation made a loss or profit
• "Define the following financial terms: Fixed costs, Variable costs, Sales revenue" (3 marks)

• Preparing an income statement

  • Sales revenue: Money the business receives from selling a product
  • Cost of goods sold: amount spent on buying or producing goods
  • Gross profit: profit made on selling the product, with cost of goods deducted
  • Expenses: Other things an organisation has to pay for, indirectly related to sales
    • Includes wages, heating, lighting, rent, salaries, etc
  • Profit for the year (Net profit): Actual profit from the business, with expenses deducted

• Fixed costs vs Variable costs

  • Fixed costs stay the same every year, regardless of production
    • Rent, salaries, insurance, etc
    • Bills for services like telephone or internet
  • Variable costs change with level of production
    • Packaging, raw materials, commissions for employees, wages etc

• Methods of increasing profitability

  • Increase selling price to customers
    • Ensures that the business is covering their costs
  • Reduce spending on costs of goods sold
    • Buy in bulk or find cheaper suppliers
  • Find cheaper premises to reduce expenses
    • Possibly remove all stores, become an all-online business
  • Make staff redundant to reduce wage bill
    • Businesses must offer redundancy pay
    • Redundancy pay is based on age, time working, current wage
    • Could reduce hours of staff instead to reduce wages

Technology in finance

• Word processing or desktop publishing could be used to prepare financial reports for shareholders
• The internet can be used to compare lenders for best loan deals
  • Can be used to file tax returns with the government’s HMRC website
• Email can be used to prepare and send invoices quickly
• Spreadsheets can be used to prepare accounting layoust
  • Allow for carrying out automatic calculations
    • Reduces mistakes compared to manual calculations
  • Can be used to create charts for analysis
  • Allows for carrying out “What-if analysis”
    • Changing numbers in the spreadsheet to find out what closing balances would be
• EPOS allows customers to pay straight into a business bank account
  • Removes the need to handle lots of cash
• Online banking can be used to make payments immediately
  • Can be used remotely, allowing for setting up an account or overdraft without travelling to the bank