2. Business Functions
• Human Resources
• Sales and Marketing
• Research and Development
• Production/Operations
• Customer Service
• Finance and Accounts
• Administration and IT/
3. Human Resources
• Recruitment and retention
– Job descriptions
– Person Specifications
• Dismissal
• Redundancy
• Motivation
• Professional development and training
• Health and safety and
conditions at work
• Liaison with trade unions
4. Sales and Marketing
• Market research
• Promotion strategies
• Pricing strategies
• Sales strategies
• The sales team
• Product – advice on new product
development, product improvement,
extension strategies, target markets
5. Research and Development
• New product development
• Product improvements
• Competitive advantage
• Value added
• Product testing
• Efficiency gains
• Cost savings
6. Finance and Accounts
• Cash flow
– Monitoring income/revenue
– Monitoring expenditure
• Preparing accounts
• Raising finance
– Shares
– Loans
• Links with all other functional
areas
8. Customer Service
• Monitoring distribution
• After-sales service
• Handling consumer enquiries
• Offering advice to consumers
• Dealing with customer
complaints
• Publicity and public relations
9. Business Organisation
• Organisation by type
• Global businesses – complex
organisation structures
• National – organisation possibly
stretches throughout the country
• Regional – could be through a county or
wider area (North West, South East, etc.)
• Local – small organisations serving
local area or community
10. Business Organisation
• Authority – the right to make decisions and carry out
tasks
• Span of control – the number of people a superior is
responsible for
• Chain of Command – the relationship between
different levels of authority in the business
• Hierarchy – shows the line management in the
business and who has specific responsibilities
• Delegation – authority to carry out actions passed
from superior to subordinate
• Empowerment – giving responsibilities to people at all
levels of the business to make decisions
11. Administration and IT
•Managing estates – cleaning, health and
safety, maintenance, security
•Reception
•Clerical work – reporting, recording,
record keeping, communication
•Overview of quality control
•Use of IT systems
18. Organisation Charts
• Changes to business structures
• Linked to new thinking on
leadership and management
• Less hierarchical
• Emphasis on communication and
collaboration between sections
• Global businesses – more complex
structures
19. Legal Forms of Business
Sole Proprietorships Partnerships Corporations
General Partnership
Limited Partnership
Master Limited
Partnership
Regular Corporation
Subchapter S
Corporation
(S-Corporation)
20. Sole Proprietorships
Business owned (and usually operated) by
one person
Simplest form of business ownership
Most popular form of business
organization – 72.2% of all
Most common in:
– Retailing
– Service
– Agriculture
21. Sole Proprietorship –
Advantages
Ease of Startup
– Little legal documentation
– No co-owners to consult
Least expensive to start
Pride of Ownership Retention of profits
Flexibility
No Business Income Tax
22. Sole Proprietorship --
Disadvantages
Unlimited Liability
Limited Life – Business ends when
owner leaves the business
Limited Access to Start-up
Capital Limited Access to Credit
Limited Management Expertise
Difficulty in Hiring Employees
Proprietor not considered an employee
23. Partnerships
Two or more owners
Least numerous form – 7.7% of all
businesses
Partnership Agreement
– Specifies rights and obligations of
partners
– If written, called the Articles of Partnership
(Articles of Co-partnership)
25. Partnership –
Disadvantages
Shared Profits
Unlimited Liability for “General Partners”
Each partner has “Agency” power
Limited Life
– Business ends when any partner withdraws
Management Disagreements
Frozen Investment
26. Types of Partners
General Partner
– Unlimited Liability
– Assumes Management Role
Limited Partner
– Liability limited to Investment
– May not take active managerial role
Every partnership must have at least
one general partner
27. Types of Partners
General Partnership
– All partners are general partners
Limited Partnership
– One or more limited partners
Master Limited Partnership
– Owned & managed like a corporation
– Taxed like a partnership
– Shares may be sold
28. Corporations
Generally larger than other forms (Except for
S- Corporation)
– 20.1% of all U.S. Businesses
– Account for 87.1% of all U.S. Business Income
Considered a separate legal entity
– Owners called “Stockholders” or Shareholders”
Ownership evidenced by “Stock
Certificate” Governed by “Board of
Directors”
29. Corporations –
- Advantages
Limited Liability
Ease of Ownership Transfer
Unlimited Life
Greater Access to Capital
Specialized Management Expertise
30. Corporations –
- Disadvantages
More difficult & costly to form
– Requires a “Corporate Charter”
Subject to greater governmental
scrutiny Diluted earnings
Double taxation
31. Corporations vs.
Sole Proprietorships
SP Corp
Income $1,000,000 $1,000,000
Expenses 500,000 500,000
EBT $500,000 $500,000
(Assume Business Tax R
Business Tax 0
ate = 50%)
250,000
Net Profit $500,000 $250,000
(Assume a 30% Personal Tax Rate)
Personal Tax 150,000 75,000
$ to Owners $350,000 $175,000
32. Corporate Charter
Legal Permission to Operate as a
Corporation
Issued by state
May not conduct business as a
corporation without a charter
33. Contents of a
Corporate Charter
Company Name & Address
Names & addresses of Incorporators
Purpose of the Corporation
Maximum amount of stock & Classes of
Stock to be issued
Rights & Privileges of stockholders
Length of time the corporation is to exist
34. Stockholder Rights
Common Stock
– Votes in corporate matters
– One vote per share owned
Preferred Stock
– No voting rights
– Dividend claims are paid 1st
Dividend
– Distribution of earnings to the
stockholders of a corporation
35. Chief Executive
Officer (CEO)
Board of Directors
President
Senior
Vice President
Vice President
Finance
Vice President
Production
Vice President
Marketing
Vice President
Human Resources
Organizational Chart
Owners/
Stockholders
/
Shareholders
36. Types of Corporations
Government-Owned Corporation
– aka “Public Corporation”
– Owned & operated by government
– Post office, NASA, FDIC
Quasi-Government Corporation
– Aka “Quasi-Public Corporation”
– Privately owned, government controlled monopoly
– Public utilities, Fannie Mae, Freddie Mac, Sallie Mae
Private Corporation
– Owned by individuals or other companies
37. Types of Corporations
Not-For-Profit Corporation
– Organized to provide a social, educational,
religious, or other service
– Habitat for Humanity, Red Cross
For-Profit Corporation
Closed Corporation
– Stock owned by relatively few people
– Stock not sold to general public
Open Corporation
– Stock is bought and sold on security exchanges
– Can be purchased by any individual
38. Types of Corporations
S-Corporation (Subchapter-S Corporation)
– Corporate structure designed for small business
– Taxed as a partnership if there are 75 or fewer
stockholders
– No non-resident alien stockholders
– Only one class of stock
Limited-Liability Company (LLC)
– Combines the benefits of a corporation &
partnership
– Not limited to 75 stockholders
39. Mergers & Acquisitions
Hostile takeover
Types of mergers
– Horizontal:Similar products / services
– Vertical: Different but related firms
– Conglomerate:Completely different
industries
Merger Trends
– Divestiture
– Leveraged Buyout (LBO)
40. Franchising
Franchise
– License to operate an individually owned
business as though it were part of a chain
of outlets or stores
– The business itself
Franchising
– Actual granting of a franchise
41. Franchising
Franchisor
– Supplies a known & advertised business name
– Supplies management skills
– Supplies training & materials
– Supplies method of doing business
Franchisee:
– Supplies labor & capital
– Operates the franchised business
– Agrees to abide by the franchise agreement
42. Franchising Advantages
Franchisor
– Fast, Selective Distribution
– Motivated Franchisee
Franchisee
– Opportunity to start a business
– Business Experience of others
– Nationally recognized name
– National promotional campaigns