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- 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
- 7. Production/Operations • Acquiring resources • Planning output – labour, capital, land Monitoring costs • Projections on future output • Production methods – Batch – Flow – Job – Cell • Efficiency
- 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
- 12. Organisation Charts Hierarchical Structure Managing Director Sales Director Marketing Director Finance Director A B C D Market Research Strategy Purchasing Sales Manager Manager Accounts Manager
- 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)
- 24. Partnership -- Advantages Greater Access to Capital Greater Access to Credit Retention of Profits More Management Expertise No Business Income Tax
- 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
- 43. Franchising Disadvantages Mainly from Franchisee’s Viewpoint: – Franchisor’s contract can dictate every aspect of the business – Pay for security – Long hours – Competition from same company