Contents Dedication / About The Author Author acknowledgements, ‘About This ‘Topic 1: Intro Chapter Chaper2 Caper Chapter Chapter Caper ook uction to Business management Unit 1 Whatis busines? ait 12 Types of busines ene Unt 13 Busines objectives. ‘Unc 14 Stakeholders Unit 15 Growth and evotion Unit 6 Mutational companice (MNCS) ‘Topic 2: Human resource management Chapter? Chapters Chapter 9 Chapter 10 Chapter 1. Chapter 12 Chapter 13, Unit 21 Insodsetion hur resource management Unit 22 Organizational rte Unit 2.3 Leadership and management ‘Unit 24 Motaton and demtiation. ‘Unit 25 Organiatinal corporat) clue (L ony. ‘Unit 2 Communication ‘Unit 27 Indusciallemployer eatin (HL on) ‘Topic3: Finance and accounts (Chapter 4 Chapter 15 Chapter 16: Chaper 17 Caper 8 Chapter 19 Cchapter20 Chapter 21 Chapter 22 ‘Unit 31 Itroditon to finance ait 22 Sours finance. Unit33 Conte and revens. ‘Unt 3.4 Final accounts, ‘Unit 5 Profile and iui ati analy Unit 3.6 DebvEquty ratio ani (ony) Unit 37 Cac ow Unit 38 Investment appa Unit 39 Budget (only ‘Topic 4: Marketing Chapter 23, Chapter 2 Chapter 25 Capeer26, hapter27 ‘Chaper28 Chapter 29 Chapeer30 Chaper 3 Chapter 32 Chapter 33, Chapter34 ‘Unit The Role of Making Unit 2 Matetng planning ‘Unit 3 Sls forecasting CHL on) Unit 4 Market resnch ‘Unit 450 ‘The7 Ps ofthe matting mis Product, ‘Unit 5b the 7 Ps ofthe makeing mit Price. Unit-5cThe7 Ps ofthe marketing mix - Promotion Unit 5d The7 Ps ofthe marking ei Pace, Unite The7 Ps ofthe marketing nix - People ‘Unie 5th 7 Ps ofthe marketing mix Process Unit 5g The 7 Ps ofthe marketing min- Physi evidence. ‘Unit 6 Iterations marketing (HL only) Ms wt‘Topic 5: Operations management ‘Choter35- Unt 5.1 The le of operations management ‘ (Chapter 36- Unit $2 Operations method 1 (Chapter 37-Uni 5.3 Lan production and qalty management (HLonh 8 (Chapter 38 Unit 54 Location. ‘ CChaper39-Unit 55 Brskeven spas : CChaper 0 Unit $6 Production planning (HL on " (Chaper 1 -Uni 37 Crisis management and contingency planing (HL oly 263 Shaper 42- Unt 58 Reseach nd Development (HL aly) m5 hope - Uni $8 Management infomation stems (HL only) st Business Mat ygement Toolkit (BMT) Introduction rs Chapter - Unit SWOT seas Ps Chapter 45 Unit Ans mati on Chapter 46- Unit STEEPLE analyse er (Chapter 47 - Unit BCG mati (Chapter 48 Une Basins pln ie ‘Chapter 49- Unt Decision ress 8 (Chapter 0 Unt Descriptive mts 1 (Chapter St - Crue business model fe: (Chapter 2 - Gant hats (Lon) = (Chater 53 oct’ ones strategies (- on). = (Chapter 54 Hoftedes cultra mensions (ony ss (Chapter 55- Fonce fd analy (HL oly) eI (Chapter 56 -Cicl path analyss (Lon) : (Chaper 8 Sunpl nae egesion (HL ony m7 CChaper 59 - Concept based ksring 2 Chaper 6 Ineral assent 7 Chapter External ssessmen 8 Chapter 62 Extended sy 7Chapter 1 Unit 1.1 - What is a business? “thdoes not take much strength todo things, but requires a great deol of sength to decide what to do Elbert Green Hubbard (1856 1915), American author and plosophee Contents 1.1 What isa business? SLHL content Depth of teaching a “Theatr of business “AO Primary secondary tertiary ad quaternary cos ‘Chalenges and opportuni for staring a business oo 2022 902 (| The nature of business (AO1) Iusines is «decision-making organization involved tn the proces of sing inputs to produce goods and oo provide services (se Figure 11). apts are the ‘esoutes that businesses inthe production proces sch ¢ Inbound aw materi. This proces generates ups (aleo ‘owas product). Management gura Peter Drake si that ‘here only one ai defen of ines purpose to erete a customer” by ering goods and services that met the nots and wants of some The tem produc can refer to both goods and series, Goods sre phys prot, sich ar smarphones, thes, books tnd food. Services ae intangible products, such a hac puile anspor, ection and healthcare. Businesses can also provide gods and sevice to other orgniations, sich Srghtansprtion, dtebtion and insane, examples: Turing the The output ra Inputsinwa er provision materials, manufactured offal components, =, goedsorin goods and ‘machine, —? theprovsion —? “services equipment ofserices bd labour Figuee 1.1, The production process An entrepreneur the individual who pans, onpnizes and ‘manages a business and its peat, aking on Snacks In doing so. The tem ves cone by Richard Cantillon (1680, 1734) an Iesh-Fench economist. Etepreneurhipdecribes the tt of busines leaders wh tend to be dinctv in het temperament, atte and outlook who drive the busines to achieve ts organizational goals Sues entrepreneurs tend to be cent, innovative and hghy pains, They search for and exploit busines opportndis by fretng andor setpoding bo change in the meitplacefood The nature or purpose of busines acy to generate added ‘ale, This occurs when thet postive difereace betwee these price of product nthe cost of producing the gos forsee. Added vue exits hen products re apesing to ustrners, so they ate ling to pay a higher price for such Management gur Peter Drucker (1909 - 2005) famous thatthe only purpose of ebusness isto crestecustomers ic the role of businesses to combine human, physical and nancial resources to create goods and services inorder to sis th Needs are the asc nce that people ms have to survive such a food, wate, warmth, ater and clothing, Want re People deste, Le. che things they would like #9 hve ach se larger home, «new amartphone, an overseas holiday ora bay cl Figure 1.2- Cokes area dese nota need Case study 1.1 -Steve Jobs Steve Jobs (1955-2011) theco founder of Apple didnot ‘graduate from university because hs adopted parents could not afford the tution fee Intend, he fook the iso setting up Apple with two ends (Steve Woonak and Ronald Wayne) in 1976, However, Ronald Woyne sald his share ofthe company wathin a couple of weeks for ust) $2300. Jobs went on to reinvent computing ‘musi and mobile phones, making Apple the higher valued company nthe word justtwo months before he le. Forbes estimated the wealth of abs tobe over $6.3 baton. Common mistake The tems customer and consumer ae often used Interchangesbly by students, although they have Aiferent meanings. Make sure you can clstingulsh between the two terms an use them in the right Context + customers are the people or organizations that purchase product whereas consumers ar the ‘ones who actualy use the product These maybe the same entity (eg, someone wna buys and eats mas, but no necessary such as arent customers) who buy presents for theirchiéren consumers ou 3 funtonal aes (or department) These Snterdcpndent functional areasare human resources finance and accounts, marketing and operations management, The in fetona aes to work nature ofbusinee requires these together inode to achive the cpaizaton goal (2) department iresposieformanagingthe personnel resource lansing, oraniaions strstr, hnsgenentsd leadership, motivation and demotiation and desing 4. Operations management ~ This fanctional aco of ith indtialemployse ations se Chapters 7-13). busines i esponsible for the proces of comsering ra materi and components int ished goods rey 2 mance and accounts - The finance and sccousts sale and delivery to castomers Example of proton departments responsible for managing the organizations incl the extraction of rude oi ar manficturng an ‘money, ensuring compliance with legal requirements the provision of tre and fourism services. Operations (auch as fling of corporate taxes) and Informing those management pic are coveredin Chapters 35-4, Inzrested inthe fnancl postion ofthe busines (such lets and potenti avers). Finance and Alarge orgnization sable toallocas resourcesto cach ofthese ay ientiable In pls are covered in Chapters 14-23 Sper Foca rn coking the es smal busines, owned by ju oP ch function would 3. Marketing ~ The marketing dep respon fr Sdentijing and sstisyng the needs and interrelated nature of four function ras of business mean wants of eastomers. It is ulmatly im charge of ensuing thatthe opera tment ofa busines ir eed to be cared ovt by the sie person. In price, the + management dsertet ris on efletive that the is product sll Thiet done though a seis marketers topromoteandselthei products Equal mashes scitis sch a markt research, promotion, prising, can only do ther ob they ave well-made product oll anding pd distribution. The nature of marketing a6 & and the necesay financial source to do so sins fneton is cveredin Chap 23-3 Question 1.1 -The business of education cation sbig busines Schools can ean revenue rom numerous sources, sucha tution eer ee paying chook sant fom the goverment and fund-aising evens They might lo laze out the facilis eich a castoams, sports faites, rama studios and swimming pools during the evenings, weekends and school holiday. Schoo use these revenues to nance their cor sich as staf sans, uty bil andthe mainlenance ofthe bulings. Inadaion o schoo! fees, parents might also have to pay free such eschaelunflor, ebooks stationery, sort equipment and food (a) Dsungush between evens and costs (mara (©) Bxemine how business functions operate in an organization such a¢. schoo (6 marks}feo) 3 Primary, secondary, tertiary and quaternary sectors (AO2) Beeeseaees: (ay econda 7 i) tertiary and) nernry Se Busines operating Inthe printy sector ae involved with amples inde gece hing frst. Primary sector busines actives tend to account fora lage percentage of output and empoymentinlow-ncome countries Busines opersting inthe primary eto in high ome countries we mechansation apd atomation, suche evelopment, there i lest rence on the primary sector in ment and national opt partly bens ther in primary sector production For example Tow income counties an oy el tes leaves and cof beans at reainely low prices. Nevertheless onan forall countries. Fr exemple, eventhough es than the primary sector Is sof France’ national tp comes rm the primary se the country benefits nmensely fom is agua exports sold alaround the worl Figure 1.2-Agrcuboal arming ipa condary Business that operate inthe secondary sector are involved mn manufcarng or constuction. Fxampes include clothes Imanufatrers, pulsing, Gems, breveres and botlers ‘omtrucion fms, clcronics manufactures and energy sector tht accounts fra relative a fecor isthe wealth sreting setor Because manufactured foods can be exported worlide to earn income for ountry. ae is ned o the natural resources wed daring he prodection proces For example, he mass prodction and ha hee economies sch a8 Tavan (China) and South in providing services 4 the gneral population and other nizations. samples of tis in the tertiary sector facade retaing trasporion and distbuton, kanking fiance, insurance, Rehcare ese and. tourism and Note that physical goods an etransformed in the proces of providing sevice. This happens in a restaurant when the chet repara mel with fresh insti, Nevers, the focus {hon the people whore providingthe service the chef and the vrstng af who serve te dines ~ rather than onthe tangible productimost susan sector in terms ofboth employment and duct Ge vale oft Usa and UK, sptarapercentageof ras rants ouput ech et) For example, th nd 0% the bour ce orci the err eto. The alo signifies thee growing race onthe tertiary secon Four 15 -Publictansportaton i partofthe tertiary “This is subcategory f the tertiary sector, Busnes that operstein te qunerary sector areinvaved nelle nnd \nowledge based acts that generateand hareinfrmation amples inde information communications techoolgy ICT) reach nd development (RAD), consultancy services tnd scene research For example pharmaceutical companies invest heavy in R&D to create innovative products, develop ne production methods, improve efciency and ap io matt The qusterary sector ests mainly in high-income oun a requires «hight edacsted workforce. i alto the sector in which high‘ech and e-cammerce businesses inst for farther gro and evotion, Figure 16 formation Communicatons Technology 0CT) ispartofthequatemary sector The foe busines sectors a Hnkedhroogh the chain of from th allthe wx through to beng delivered othe consume ee Figure 1). Primary production 4 Manufacturing 1 Services (tertiary and quatemary output) 4 Consumers Fgure1.7-Te chalnof production Al four busines sector are inerdeendent because each sector ‘eis on the eter to remain in estence, For example, a sterils sch a cre of, woul! not be extracted if there seo no need fr oll cinery whit there wold not be any need for ol refiner if there were no casters forthe oi ‘ch a motos and airline compinis inthe etary sector Likewise, erin the secondary sorely on tee splits for stocks to ensire that their pico targets are eet Businesses areal interdependent they ll ned energy, ICT facilities, manufactured producer pods, nan serves and ‘management constants. Figh-income countrles ae able t explot the tertiary and qvaterary sectors the man contbutos toto ouput And employment. Busineses sich Apple and Sareung see Uhemscies as operating inthe serves seca (they outsource rodaction of thee smartphones and computer hardware to manufactures such a Foxconn). Apple else hat there ‘ore added vale ia the tertiary bd quaterar sectors rather than seeing one-off payments om sling manufctred qupmen, ican sive a ow of revenue fom offering er sales sevice atch at macnance md support servicesws C4 J c Question 1. 2- Production Sectors study the data below and answer the question tha follow, and Crepreset thee counties: France Bangladesh anc the Pilppines although not neessrly in that ode Structure of employment (6) recat 3 = s Nanufatung 1 2 30 Sevices 3 7m ae) (a) deny the counties A Band mars} (6) With reference tothe date above, expan your answer to Question 12(3). femars} npsenlipedrgLatof ourtes by seco conposin ef the abo oe Challenges and opportunities for starting a business (AO2) Share ne cli es ces Stich tbe a tht prot he os fsclting and thresening its survival The callenges for String upa busines incude ay combination ofthe lowing + Lack of finance All businesses eed finance for the chase of fed ass, euch a8 premises, buldigs, Inachnery and equipment. However, start-up fms and most owners of new or sl businesses 0 not have the rodents to secure scent funding withost major challenges Even if ntepeneus ae able to some borrow rmoney the funds may be inset ofthe raivly high nero charges migh serious afec the cash low prstion ofthe busines (ie Chapter 20), Hence, new sle trader (ee Chapter 2) fen hae to remortgage their own homes to raise the Ginsace need, thereby ofring the lender more clr (nancial ec) in ae they fi + Unetablished customer base - A major challenge icing ee busine atractng customer Le building abroad tnd loyal customer bat, The problem is intense hen thee te well established competitor tht aeadyoperte In the marks Customer logy it bik over loa period 16 oftime, which may reg ames of money maktingkow-hoveand lag Cath ow problems money avalible fr th diy ransing ofa busines) is Finmncing working capital (he ‘sor calle fr many brine start-ups. A busines fished outa ned gon that cannot easly tun intocash Customers might anand lengthy red period (epi between 30 to 6 ays) enabling them to bu rowan py ltr, othe busines wll nt receive the cash Payment stl he credit per is over: However, during thi time, the busines stil eed to py fr is 00-0108 costs such a wages, re, uly bills, tues and interest payments os bak ous. Marketing problems businesses fal o mest customer ned, thereby resulting Mareting challenges ase when In poor sales and a lace of proftabily. Sapphing the righ products to the ght esters tthe ight aces tspeclly crucial fr ew buinsses However, sll and few busineses might lick te expertie to do this. Quite ‘fen, the ey o smal uses sucess enti a niche (or gp) inthe market and the ili. For example, backin the 1990s Amazon etic huge opportnites of wing ks and ther products. Baropea fine caries sch a exsyet the lternet a 2 channel of stbition for b tnd yaoi dented eatlyon the niche make or no fal badge) ae_ People management problems Busneststc-upe may boar product ll. This can lead to poor lev the needa retrain sao to ei peopl eve business might not know the Mel organizational St motivation (se Chapter 10) that bet sits their Production problems - It abe challenging for business Leplitos 1s necessary for basnesesto comply wth insurance cover for satf and. baligs, pokes, sumer protection Inws and rules about Inte Property such a copyrights, patents and trademarks (ee haper 42) The paperwork and legal reguemens of setting up anew busines can be cumbersome, canting time consuming and expense Any oversight ould eat in the busines having to pay conpention or nancial penahies This would. belo Aamage the already igh production cost - New business ar hey to ave high set-up cout (ase Box 12) and running costs de to the large amount of money needed to purchase or pay for capil equipment, machinery stocks (inventory, ret advertising, surance ands fort. Slr busines wll aso bea cost disadvantage a they eanot benef fom of seal allow larger and more etablhed business to benef fom ler average cots of production dv to the sa of operations such as being abl to get dicouts From thee spins fr large blk purchase bing able to borrow money a lower inet ate esse of Use lager size an financial collateral Poor locaton -Busnests faces din inthe location decison: by areas offer the highs potential number o ‘stoners but the premises intese eas will ao cost morgage ayments, acount a le percentage of tal ‘cot fr many business, Anam foray new busines bredkeven 81 n as posible, by beeping fied cents dow. This one reason wy many entrepreneurs set up small business that opera inital from tei own homes (ich aso as some tx advantages. fe Bez the founder of Amazon, started hie online busines in hie age. OF course this option not suitable or business where location ice Chapter 8) plays 4 key fctr in tera influences - All buses, leaps of sce or how lng they have been in opestion, are prone fo ‘exogenous shocks ee Chapter 6) that cresteacalenging trading environmen, sch a lob financial eis or the outbreak ofa pandemic, However, larger and more ‘tablished firme tend tobe Iter resourced to handle these external inflaences. Hct, new business face the sued challenge of being more ulaeable t external shocks which aso means the ptentil for busines fle is gre. 7eel Roses Figute 18 -The COMD-19 pandemic caused havc for businesses across the werld Howeve thee are may potential portunities for starting pa busines These opportunities can be remembered by the mnemonic GET CASH® + Growth - Entrepreneurs tend to bene personaly when there isan appreciation in the vale of ther business, specially as property an land fend to increase in value ver ime. This alld copa gow I qute common forthe capital growth of a busines 1 be worth more than the vale f the owner slres. Bl Gates, who co founded Microsoft 1975, ade is fortunes mail frm thecapitalgiomth of Miro the worlds rgestsotare maker. 4+ Barings The Chinese have a saying that "You ca ever {gt rich caning money fom working fr someone ee. ‘hut isbeease the potters from etn Up Your ‘on busines can ety outwegh the cos, eventhough the risks are high. is common that entrepreneurs arn far in exes of salaries fom any other ocupation tht they might otherwise pore. Ti Cook, EO of Apps Is reported to have an anna remuneration pacage of und $25 millon whist Elan Musk, eit CEO, pid round $95 lion aya! + Transference and inheritance In many societies its the ctrl nom to pas on ats acuding business othe et genestion, Many elemployed entrepreneurs view thc business a someting tat they ar able Yo pas on (arferen) othe chideen ibertanc) to give them sense of ancl seary tha might not be posible if they chow to work fr someone ese. The Walon family {the ices fin the worl with an estimated wealth of 18 GRO eae Cun eu + Security ove $215 illon) own over SO ofthe shares in Wala (he words rest rete. The Mas fray isthe second ‘wealthiest family, wth an exited wealth of $120 blo Macs nc, a privately eld company (ee Chapter 2) that produces confection, proceed foods and veterinary fervices isa maligenesinal family business tha was founded in 1911 Challenge ~ Some people might view setting up and running + business 1 + petonal challenge. I 6 thi ‘hatlenge that drives them te perform snd. what give ‘hem patel satisfaction. ong saccessfal in business ‘bows eee This petaps on reson why mal Fionates uch a Warren But, Caro lin and Li Ka hing conned to work ps te oficial retirement age, Autonomy - Working for soma de means exact that. Employees veto follow the asractions and rls sty the orgniation that they work for, such asthe contions fof employment, working bets, employment benefits ‘nd olay eniernent. Comers being self-employed trea that there is autonomy Gndependence, freedom of Choice and exit) in how things are done within the rgntation, Esently, thir opportunity refers to the benefits obing your nn bos. Simi there cold bea greater sense of fb security fr someone who I thee wn boss. By conta Cimpoyees can te nnieed made redundant or even replaced by technology. Although the Wks are grea ‘being selFemployed also makes i potentially easier to culate personal wealth (fancies) 0 provide higher ands fo (ery) reienent Hobbies ~ Some people might want 10 pursue thet son of oun ther hobby and interests into business ppomtnity. Sues enepencurs have 2 passion for i they do and thi made easier if the mature ofthe work i direct raed to thelr persona interests, Top Selng author, IK Rowling + an example mie Olver the cli chet as et up sverl oi own estanrats. Internet entree Mark Zacher became the words youngest ilo when he was just 28 years having {Co founded Facebook and be-oming the companys CEO, In summary, people se up their own businesses due to the opportunites to satisfy ther penal dees - sch so al t peronal vison to ave the opprtanity to achieve sucess (0 be thei own bos or np to ea mor extravagant ise (it and when the business becomes success), Hower,pcan numberof ne business falta survive. Thee are thre ine elated reasons or challenges beind hit: ack of ‘chin the Basins poor cost contol and substandard or weak management and lesdeship, Key concept How important creativity for busines ‘Theory of Knowledge (TOK) felect onthe opportunities for stating up a business. Haw do reson and emotion interact to affect the decisionmaking process? i emotion or reason moe limportantin tis proces? Theory of Knowledge (TOK) “To what exten i lc an essen part of being succesful in business? How does this impact the nonlege need to succeed as an entrepreneur? What is a business? and the key concepts Busines activ the proces of tuning inputs (nd boas, ‘apital and enerpise) ito oupts (nshed goods and services) in order to mest the needs and wants of dient casters. respective ofthe county or clu ll businesses ste toad value in the production and provision of goods and services spat ofthe sustainable busines sates ‘Theseasns for setting up busines For ex x vary rom ae oust mpl cedures are needed to esas 2 busines in Sng wd Hong Kong (China) and New Zaand, thus promoting an culture to another only few lei Tosnetes can thee. In other ples ‘ch a8 Chad, Lip anu Myanma, a iskahing entrepreneurial clr sot So ppaen, so thee i elie lite ed utc Eatetly, the ature of busines tv to sat the neds and dese of euslomers wht falling the opin ten cbjetves, uch an poft, growth and corporate sci responulity (ae Chapter 3) ta te long ran, all businesses tt pnerat profit or sup in oder to aviv, although there lb sires an dif for prof and not for profit organization gp abet doing thi se Chap 2). Complexes in the global corporate word mean that business ‘Case study 1.2 - Paul Buchheit and Gmail ‘reat and the abit to adapt to change are crucial Skills to compete succesful n the corporate Word. aul Buchhnet, an employee of Google is credited as the creator of Gmail. In 2001, he programmed the frst working version of Gmail in st one day) and was 23t Facebook until 2010. In 211, Buchhele woo The Economist Innovation Award forthe computing and ‘telecommunicatons fd. Key concept Discuss the extent to which sustainable business financial succes.CORE REVIEW QUESTIONS 22 Howe goods and services dle fom each ther? 3. How do neds and wants of consumer ier frm each 4. Hop do cstomers and consumer dif rma each aber? (6 What ae the fourbusins sectors ofthe economy? 7. How doe busines ad vale oe gods and services? 8. Whats meaty the chai f production? 9. What are th man challenges for busines start-ups? 10, What the main opportunities for busines tart-ops KEY TERMS Adding value i the practice of producing a good or service rodaction proces Basinestes ae orssizations involved inthe production of rods undor the provision of services ‘Consumers re the people or organization tht actully we CCantomert se the people of organizations that boy the Entrepearars re the people who mange oxpuise and an the resources needed for business activity in pars of snes oppo in rear for prot They are risk takess who explo Entrepreneurship refs tothe collective knowledge, il and experiences of ettepreness 20 Goods ar physical product produced and sold to customer, such es laptops books, contact lees, prunes and re Needs are the basic neces hats perion must have to survive, ncuding Paty sector refer to busine ised in the clvation ‘quarrying fishing ol explortonand fret. Production isthe process of eeing goods andr service, ing ale inthe process. ostenary sector is eb-cagory ofthe tetany sector where business te ive i inlet and knowledge Secondary sector stars to busneses concerned with th onstruction and manufacturing ef products Services are intangible products sold to customers, such at the sevies provided by sine, restaurant, cinemas, bans, eth nd besa spas, shoals ad hospi Tertiary sector refers to busines involved wit the roi of services ctomers Wants are peoples desis, the thing they woud keto have sich new clothes, mariponer, overseas ldays and jewlery gue 1.9- Holiday are cammon wants (ses)Chapter 2 Unit 1.2 - Types of business entities “Toopen abusinesis very easy; to kept opens very cfc” Chinese Proverb Contents 1.2 Types of business entities SL/HL content he main tures of he folowing types of oganzatons Soletraders Privately ld companies ‘The main features ofthe folowing types of for prof social enterprises: ube sector companies, | The man features ofthe flowing types franpal soc enteprier Non goverment egarizatons NOH) 0 80,2022 Depth of teaching Eel Distinction between the private and the public sectors (AQ2) O== that operate in the private sector ate owned and conrlled. by pvt individ and asinees, ater than by the government. They Alfer in sz, ranging from those owed dnb jst one Person, to large mulintinal companies that operate scrost the woe. The main aim of mos, although nt all pate secon organiations it eam pro fr is owners i the stv dierence betwen im ales revere (the money famed from selling is products} and ss costs (prodaction ‘ependiares such as wages and re) Organizations that operate in the publesictor ae under the overship and control of “he goverient. They typically provide essential goods ane serves that would be underprovied or ineticeny provided by the private sector 4 healthcare, eduction, soll hosing and the emergeny services: Organizations that ae partly or wholly owned by ‘he government ae called publ sector companies (or sate owned enterprise, sich st the UK? Tanupot for London, Singapore Alines,Arpocts Authory of India and Canada Poet (postal services aEmergency service ar povided by the publ essons for public sector usin sty inca education, health ae, auseums, public parks and poli bate sold wastefl competition athe government sable alin on large magnitude) nthe provison of eran sae (ort savings fom services sch as posal services and atonal defence. Ao a aw and onder system, Question 2.1 -The private and public sectors Case study 2.1 - Australia Post Austais Post (winwausposteomau), established 1809, is 2 state-owned enteprise providing postal services, employs moe than 35,000 people aces its network ver 4330 retal outs, enoyig revenues in ‘ces of ALD? Son (USD5.45bn tend tobe large employer of wachers doctors and mus » stbllse the sconomy, 64. many private sector comercial banks were natonalia (bought by the fevernment) during the global credit css of 2008 preventurthe inal tare ‘hroughout the COVID-1 glbal pandemic also eed to Education housing and healthcare services canbe pronded by bth private sector businesses nd the public sector, (a) ictinguish between the aime of organizations pecating inthe public sector athe pate sector. (©) Examine how housing provided by a housing cooperative might ifr from that prided by a private sector business 6mors)Types of organizations (AO3) main etre ofthe fellowingtype of orsnizaions (@ sole trader, (4) partnership, (priate Bld enpunies nd (i) publicly held comps. ACS ct snes that operate ia the pete sector i to make prod Aer alla busine can only arrive i the lng term sins ent ile in terms Tis profil Profi-based owmeraip and contol jou do ot have to rena basins spy Beate you om it), how they alse nance and howe the profits are dtibaed. The four main types of prof based fginzatons are sole traders, partnerships, privately held repent sd publicly had compari, (i) Sole traders ‘ale trader (or tle proprietor) ian individu who owns hdher personal busines, The owner runs and conto the buns and ithe on person eld responsible fre saccese or file. the mos common type of busines ownership rons the word. Examples inci s-emplayed decors plumbers, mchanic, retaurters esance photographers Private tutors and traders may choose to work sone or they ght ploy her people 1 hep run the Business. Sole propectanshps are ofen smal faly-ran business and cn be at up wih »reatiely small anount of capita Start-up expt usally ‘hained fom personal savings and borowing Figure 22- sole taderisa business entity owned by 2 single person te unincoepoesed. This means the owner i the same legal ity asthe busines sel As there is no egal diferent ‘wen heburner entity nd the owes the sole trade coud lose hivher personal posession ithe business colapses (as be forall the debt the owner is pervonally reponse ofthe sie) Many wellknown companies sted at sole traders xample, Chanel (The House of Chine) was started by C Chanel in 1910 and has hae loa prisence today. Marks {Spencer as et op in 1904 by peters Michael Mar od mas Spencer (who orignal Proprietorship by ack Caen In operated a sole trader Sam Wao tre hit tunes with persona savings of $5000 and fom hse in-law and went ono estaba Wala the word largest elle Case study 2.2- eBay ‘he eBay concept was created in 1995 by entrepreneur Prete Onidyar in tesponse to alfcutes his ancée encountered when she was thing to sll cllectbes such 35 PEZ candy dispensers, Omidjar started a sole proprietorship, using a prototype called Auction Web, to sell these and other goods to 2 growing online ‘community. Thee years later, ir 1998, eBay became 2 publicly held company, making Omicyara bilona a theageof 31feel iS Table2.1-The advantages and dssdvantage of slepropltorshipe “Advantages ofsole proprietorships ‘Disadvantages of sol proprstorhips Few egal formalities Sle trades are quite 3s7tosetupand ‘rtp costs are sally much ower incompartonto staring father ype ofbusiness ees fesponsbleforithebwshesfals Profi taking The sae wader the ony onner and erfo {oletraderanincentive to worhord and become succesful anyone, have Rexblity in decision-making (wuch a dictating | Personalized service Sal vada can proce a parsnal reactor age are mh oe become generic and impersonal “ - ]Worlosd and stress ~ Own often have to do ther own accounts marketing and human resource management. The Privacy - Uni ater types a buses enn sl Wades records avaliable to the general public 2 the ower enjoys onfdentiy(athough the sccounts can Be sre Timited economies of sale i tle trader frat 3B expo the Benet of re-sale produto, so the pet This tends to reduce the compevtiveness and profts for (Guihar decisionmaking ~The be no athe ones 1 sbaacon ther oun needs and prefetences Tack of contnuty -The running of the buses cn ba [goon holiday orbecomesil the businessmighthavepreblems ‘Question 2.2-- Flowers by Cam. Cam Tani 2 Sle wader who operates a small ist shop called Flowers by Cam in Mantpller, France. She aranges and delivers Rowers ola hospitals, hotels and schools in ‘thelocal area. At times she vceives large orders for wedelings andifunerals She sao busy asa ingle mater oftwo schoo aged chien, (2) Define the tem sole trader smarts (©) Examine the costs and benefits to Cam Tan operating 6mars} her busines as sole wader 4(ii) Partnerships A parinersipis 3 for-profit private sector business owned by to oF more Peron. For ordinary partnerships, the maxim number af owners is 20 (although hs ca vary fo recount another). The few exceptions to thru cde Profsioos sich at salictors and accountants where lasing hare probit Like sole traders, partnerships are financed may fron the peonl funds ofeach awner However, puters a pol ie fn together to aie more france than letraders. They can ai rake money from owners who donot stively takepart nthe running ofthe partnership but have nancial sake in These investors ae cil lent partner (or sleeping partners) and are elie fora portion af any profits earned ty the parmereip. At lest one owner mast have unlimited lily, as partnerships are unincorporated business, but ‘ypc all partners share thi Lalit Athought isnt eg requirement, most partnerhipsreate forall agrerent between ech af the partners. Without contrac, profits oles mat be shared equally amongst the partes who have the same rights inthe rnning ofthe I alegal contract i drawn up known a deed f partnership (orpartership deed) then tistikely to inclu + Theamount of fiance contrite by each partner + Theroes, oblption nd repens of ich parte + How pots oroses arto bested ete the pariners + Conon for iotoducing ne partners + Clase forthe within ofa partner Procedures fr ending the partzrhip. Figure 23- Patserships const two or more owners ‘Table 2.2-The advantages and disadvantages of partnerships ‘Advantages of partnerships ‘Disadvantages ofparnerhips [Financial strength: Parnes have more financial stenath Invest nthe busines ye they ar stil ay e357 set up In general Ri to ease or parnerhpst secre exter routes of france duc tothe lower ss Uniimited Habllty Legal, partesips are. responsible or ter dees wholy or severally sang the dt can be psi by ether one partner (holy or shared srong the Partners several The rate escepton whined laity arners whohave Bee lected to hive bite lab. Spedasation and division of labour -Uaike we waders partners can benoit fom shared expertise shared wold Sndmotal support Forexampis sls frm mighthav partes ho Specie incorporate aw, vor lw a rial a Asa rest scent bases kl tobe much ge, ‘Tack of contilty- Problems may wast a parr lover ‘hefirm opoeses ay because the prneehip deed becomes Invalid ie eer tobe setup again Rlsporsbeto accommodate Sane changesin adeedof pare although tor wil need to speidine and money} on ating the ew contac. Financial privacy Lhe sole ropratorips patneshipe J nothaveto pubic thei financial ecode Teer they can enjoy fae degree of rani vac Prolonged dedston- making la conparion to mle ders, [Secionmatng ie Tikey totale longer a there are move oumersinveve.Osagreemensandcontct night asa accu, Costffectiveness-Parnenhips can be more com eacive than oletradersaseachparinerspedatzesincerain spect of th business toe aling labour productivity and perioral ciency [ack of harmony Digreemens and conf within parterchip common bat there ust 0 be metal es. Each partner lal and rancily scountbl allots, 503 mistake made by one person can reduce the rots fr‘alte iby exists to prevent sole teers and partners rom making cles and iresposibedecisons a managing the basins makes rate individuals acountble for teractions and ddsons. However, the rik of los of prvat prope personal onesians can deter ole trders nd partners ram aking rks, choosing to make sf decisions instead Question 23 -EXP X® isa small Cinese restaurant with takeaway service located in London. twas established in 2016 by partners Keith nd Toina Hoang. EXP sun aa partnership vit each partner having 50H of the stake nthe business. They have 2 vrorforce of 12 people. including ches, countr staf and deliver crew, EXP eis heavily onlca customers but faces Competion fram nearby piza outlets andInian and talon restaurants. xP popularity has grown wth loyal customer bac. Keith nd Tonina hadto discontinue wih the dsribution of take way menus inthe lea area 9s EXP already operating near ful opacity Kelth and Tonina thought best to maintain the oly oftheir food andthe punctuality of thelchome deliveries to maintain the reputation hat they have established (a) Define the term parmershp inthe coteat of busines ene. emake) (6) plan two advantages of running EXP a5 partnership. amore} (Discus the cost and benefits of EXP remaining 3 small busines. romans) (ii) Privately held companies CCompanics are busineses owned by ther shareholders. Seting up a company can be complcated and expensive FM Starches we indies or oer bushes tat hve, tte ae re and elation that must Be obeyed or FAB vest money 0 prove share capt fo « Tastes tobe sold on the tek exchange A ack exchange i FSM cocporaton. Corporations ate someties cals joint-stock 3 marktplace for trading stocks and shares of publicly eld “Companies because the shares fhe business (or tek athe compaaies (or public limited companies. Examples inde cresometines Known) ae oily eld by unerousenttes. the London Stock Exchange (S2) and the New York Stock Exchange (NYSE) Companies are incorporated busineses, Le there is a Tegel ference between the owners of the company (te One eaton fr such gation st protect investors who buy sareelders) and the business ell The company, being «shares in usieses that thy do strum or contol A Bond of seperate legal enti, has its own lp sights and dis, For Directors (BOD) selected by shrcholdersto un the company zample, the company rather than the ovaers, woud take on ther bebal.Diectrs are ected ecase of thi sil and those who inftng copyright and patent laws to court. Kalo. expertise and beause hucholdes do not necessary want to nea that companies hae limited ibility - shareholders do ge involved in the dally runningof the company. The BOD i ot stand to lose personal belongings ithe company goes into eld responsible for the eunningof he company bt i eld ankrptcy ot liquidation (ee Chapter 19). The maint a accountable tothe shareholders, a most aes, ech share eld Shareoldr can loses the vale of hive investment in the eq one ve, othe moe sare: el bya investor the more Company, This to safeguard investors imagine an diary voting power they hve ln ai. ndviual shareholders end Inia! having to share the debs of «lng mukintonal to have very ile say as he large isittional investors company that she had invested tnd iectos who hold the majority ofthe shares na ited ably company 26Examtip! basins, The busines wll ural bave the word ‘Limited! he eters ‘Lid afer mane. However, this practice va Stents often use the words business and company’ fom one country wane intarehangeabh Whisthiscan be remember tat‘omponies’ are owned by shereholders, All compunes nt old an Annual General Meting (AG there can ony be two types of companies privatly tlw thecwners a hae ty forte) inthe anning oth held companies nd publicly held companies The tm business, Thre ze thes mun proces aa piel AGM tbsnes als includes other forms of business enti, 35 sol traders an parnerships. In summary then, Shaccholders vote on rations (promises or delratons panies are busineszes but not all businesres are ‘ companies. companies nd pblly eld companies ively ld company (or privately owned company isa + te provous ers financil account Figure 24 Companies musthld an AGM fr shareholderfeel Table 23-The advantages and dlendvantages of limited lablty companies vantages Diadora Talsing finance - Companies an ase age amounts of capital byseing shares, therearenontrstchorgesandsereholdes Mepaidddends onlyfthe company ears pro Communication problems = Quke offen, 32 9 company Eecomes ger services and elatonships ean become mote personal to bath customers and pve. ited Tilt “Ara compares have Hed ably ender toatact estar the sks are elaely om fr them Thdded completes ~ Raning + salepropretoahip o partoeteip fe cepper and less bureaucrat than ronnng Fate ay company. Continaity Unik partarhpr and soe Wade, the legal tference benveen the company and its onners means I an cominue to operate a soporte legal erty, even wth a Change of owns Compliance costs Campyng wih the rls and regulations ot beng company ada ott runrng cos Ths particulary ie eve for publi held companies du to stock exchange les and egos Tzononies of sale ~ Bus fo ther ager ae, companies Con bene fom sconomet of scale ower unt cass of [roduchon a ha firme grow Foresample sual cheaper Bea company to borow money than i fr Sle trader oF porns ae Inied companies re es of nari sk Disclosure of information Francal cata momtbe proved Bl soreolgersThs can bea tine consuming an expensive task av audtre have tobe hired snd Annual Reports have to be published and debuted. Pvacy bo longer eas In omparion to that enjoyed by sole toes and partner Productivity ~ Conponies an ie decors and spect franages tun the fina: there sno nee forthe owes {D be dct vlad in the day runing ofthe business Hiney are so move aly to employ spect staff such as lotr lawyers and acountams Therefore the output and productivity level of iste bly companies are general | Fier tha fund solepropietahip and partnerships. Burenvcracy Therefore bussucacyinvohed nseting up and runing» company, eg. nthe UK. the Companies At 2000 sttes thet nium of (0.000 ($7000) mast be sued sare capt Solitors mut bere to ensue that i cocurnent legally accurate Ravertsing and promoting the company’s inal publ feng UO) add to the costs osting the AGM also expensive Tax benefits Sole wader ad parmerihips pay income ta on the profs By contrac companies poy comporation tao | the poi The tighest income teat tends to be greater than the ate for corpontion tx Carnpanies also Benet rom $ wider range ofallowances and oe deauctblecoss. Tost of control Wis sole Waders ad partverships retin control of the businesses, publ eld companies face the potent teat a takeoverby aval company tat utchases Erno stake nthe busnet (shares ar openly vale fr purchase on a publi sock exchange Before tied laity companies can begin trading, two dcaments muse produced and submited tthe appropriate thors + The Memorandum of Assocation - « elately brief ocament outining the fundamental detas of the compan, sich sits trading ame, is main purpose, he ‘egies bsness adres and the moat of share capital invested + Thedtlclesot Association (Articles of lncorporstion) thelonge ofthe to documents, sipolting the Internal egultons and procedaes af the company suchas the Fights, cles and power ofthe BOD and shareholders “Adinietive sues ae als covered, such s procedures ‘ofthe Aanusl General Mesing (AGM) the processes forthe appointment of drcors and how pris wl be disibuted (Once theauthorlesare sted th the above documents and anapplcaton feces en pd Certificate of lncorporation Isic the company Ths cme recognises the busines as septate legal entity fom ts ters harcholdes) and allows thebusines ota trading aie aii company.Question 2.4 -Mars Inc. Mars global confectionary and fod processing manufacturer with annual sls In excess of $37bn Perhaps more fhrprsinglyand unusual fora busines ofthis see, Marsis entirely ovmedby the Mars familys a prvately held company making itone ofthe ages faly-oumed businesses inthe worl. the company employs more than 130.000 people The company started with Fenkin Clarence Mars (1883-1934 bakin 1911 whea he and hs wfeEne started making and alng varity of buttercream candies in theihamein\Washngton USA Is 1920 Fankand hssen Forrest Edvard Mas produced the Mily Woy bor- known In Europe and other pars ofthe world a the Mars art wasan immediate succes ray the porto of Mrs brands includes Snickers Wrigley, MAM and Tix Hving dh tho include Pedigree, Whiskas, Cesar and Sheba. Mars brands are recognised and used in alms: every country onthe Source: adapted fom Mars webs (wurwmarscom ia) Define the term privately held company. f2marks} fo) iscussthe decison ofthe Mars fay to keep tel business asa privately eld company omars} hist a publicly held company shares many similares Flotation is the term used to descrhe when a publ held th a pivly held eompany it able to advertise and sell _ company ists allox parts snes external inetors share tothe general pubic via «Stock Exchange. often (shareholders). This process is known as an initial public netics the eters PLC ae is mate, but ai this practice offering (IPO). The IPO makes the publely held compan ries between regions (ee Box 22) Bax 23 shows examples lita (or registered on apublstockerchange Flotation bps publ ld companies to gener aon youve of finan fe sonny, Fo txample, the Agricul Bask of Chins relsed $2.1 bilion in proceeds rom is 10 in 2010, the scond largest PO of al ne The second lrges IPO took lace in 2014 when Ababa Group cased $25 bilin on the New York Stok Exchange (NYSE) In 2019, a Aramco broethe IPO record by ras 5.6 bllon onthe Tal Saud Stick Exchange gute 25 -The NYSE san Wall Stet, Lower Monhatanin Nev York hy »" feel The largest shareholders of public held companies tend to shares in ther compass, For example, Porsche the mali Shareholder of Geran automaker Volkswagen, which in turn owns a majority of the share in Aud, Beale. gat, Lamborghini SEAT apd Skoda ‘Nevertheless sharcoldes of company fice potential ik despite thir lability beng mite. Unproabe companies ‘anno distribute any dvdends, The sharpie tals ‘rest causingnegtve capt growth, Sharcholdr-also place ther tut in the Board of Dustors and senior management team torunthe ompany on thr bbl slough he interes of rectors, manages and sbucholders might confit (se (Chapter), For example, managers and directors might side mptore pay a sontions to aes concerns fom the workforce bt this coud edace the amount of ands avaable Foe vend pa to shareholder. Case study 2.3 - Google (mn 1th August 2004 Googe rc latedon the NASDAQ stockexchange allowing ts tation, thereby becoming 2 public Kite company andrasing 527bn in the IPO The shares oated at $85 each but had reached over $600 by 2014 an increase of over 505% In ten years) By November 2021, Google's she price hit another) peak (of $3037 which presents are of 34738 sinc ts. Common mistake tee ncorect to state that patel held companies are smaller than publily held companies because ths snot necessarily the case. EA, LEGO, Huawe PricewateshouseCoopers anc Mars are all market leaden their respective industriesSe erpriter_ ae revenue generitng businesses with sca objectives atthe core of their operations ie commercial fr prot business rive to ren i for teir owners, fr prot octal enterprise o tetra urls fr sci gain rater tan persona gan Social enterprises canbe operated sa non-proftorganzation os 4 for-profit company. Esther wa all soll enterprises have two mn goal To acleve soil objectives and To ear revenues neces ofthe cost, Mer also entrepreneurs (hose who use busines to socal) cannot deliver the socal good they ese they dont manage the nancial eat of hei busines Their aces in elping hers depends on ther ability to operate ts stainable business, Le without a surla or prof, there fend snes forthe greater good Case study 2.4 Grameen Bank In 1983, socal entepreneur Muhammed. Yunus esabished the Grameen Bank in Dhaka, Gangadesh Grameen Bank. often refered to 28 te bon forthe oor was set up to provide small loans (known a5 Icofinance) t those ling in poverty so that they Would be able to become fancy seuffcet. Instead operating ike commercial banks, the Grams Bank doesnot require any cllateal franca secur), from ts boromers According 10 its website (hps/grameenbank or, ver 37 percent of borrowers ae women. The Grameen Bank has assts in excess of $280 and employs more than 29000 workers. succes a 2 socal enterprise meant that De Muhanad Yunus received the Nobel sac risein2006andthe Presidential Meda ofFeedom award bestowee by US President Barack Obama in 2003. he main benefits of cl enterprise ae + They ws any financial surplus t bene others in bey Peon rewards for sharholders nd owners + Theycrste employment opprtnite tery improving + They ae run i tanparent way providing tang benefits in addition to having a dean compra conscien (i) Private sector companies Privat sector for pot soil entries opeste in saa vay to tradonal forproft busines, bt ee what these organizations do with ther profs or financial surplus tat setthem apart. For prot soll entrees reimet or donate ny supe to crete postive socal change. Furthermore, Private eetr fr prot socal enters ue ethical business practises to achieve the soc alms rested tothe neal of Joc communities and voces. revenues and fsncal surplses in cil espns was ‘To benefit the society soil busine amputation condacts sctviies reed 1 the society Une char that rely donation, pete sector fr prot social enterprises need to ear a Branca surplus in onde to survive and operate 2 s sustainable busines. Faring 3 ancl suri also Sportot to enable these soil enerprises to expand thse busines activites and outreach prams. Private sector fr proft social enterprises prodice goods or provide series inthe same way es fr-poft commit lonpniaion. They can ako be ese a een leg emis that oper in the private sector, sich as pte or publicly held companies ra conpeutves. They als compete seth other basnesss that operate he same mart Both private and public sector or prftsocia enterprises have thre broad ins, commonly refer toa the tp bottom line. The tiple Bottom line an coun framework coined by ohn Elkington in 1994, consisting of 31feel ia cpl back inthe busines for societal bees nerve Egypt suport es-advantaged member of oc side f Naga Falls, with frat on formed land wea susie 2. Brvrommenil ans to pote he planet, by opertng in ‘vironmental Gindly and sustainebl responsiblewaye. + Televsin Nacional de Chil (TV) the leading Chiles public service teeision broaaster, founded in 1968 (ii) Public sector companies + Temasek Holdings ss Singaporean sate ovmedentepri that owns 56% ofthe shares Singapore Anes Public sector for prot social enterrites ate state-owned errs run in 2 commercial way. They ae formed by the government through Iga means and regulated as they Case study 2.5-China Mobile partite in commercial busines activites for nani These public sector companies re owned by the goverameat, Chine Mobieisthewvidsargestmobile phone operator whether wholly or partly. They help tore shuch-needed wth over $455 mili subscribes. Founded in 1987, ovement revenues yet provide even services tit may China Mobile state-owned publc sector company, Ie ineicent and undesirable le aolely tothe peat sectoz__with the Government of the People's Republic of China Samples of such busines ents inde séme national owing 7425% share ofthe company. China Mobi is tine caries, sltport authorities, transport persons, fated on both the New York Stock Exchange and the Teecommuniations companies and opersiors of potal HongKong Stock xchange wth the government ofthe service, People's Republic ofChinahoes over 74% ofthe pully traded shares Examples of ple sector companies ran a for-profit soci terri ndude Australia Poste the Ansralin governments busines nity tht provides postal services eth over 4390 oats Question 2.5 - Hong Kong Disneyland (HKDL) Hong Kong Disneyland (KOU is 2 theme park with three oie hotels. The thame parks ity ommed bythe Hong Kong Special Adrinstrativ Region of the People Republic of China (the malonty sharehelder) and the Wal Disney Company, HKDL opened on 12th September 2005, ving created 36,000 obs. ts th smalest of all sneyand theme parks nthe worl. HKDL dd not ern a profit until 2012, delving net profit ofKKS 105m (51397) Analysts estimated ‘thatthe theme park would generate HKS14n(519bnhn net benefits othe economy overa-year peri asthe public sector company continues to expand its operations in Hong Kona. (2) (Define the tem sharehaler P2morks} (i Define the erm publi setorcompany mars} () Dicuss the deckion ofthe Hong Kong Spacial Administrative Region ofthe People's Resublc of Chinato expand FDL a. pubic sector company. ‘omarks) 2Common mistake ‘not cnfuse 2 publicly held company wit a publ Corporation, The forme sa linitedlably company thot operates inthe private sector but offers shares tothe general public on astockerchange. heaters cymes and operated by the government on behalf of ‘thegeneral pubic or society ae whale da). The UK Cooperative Group isthe arg Worker cooperative ar et up, ocd and that employee members. Example i involved in production and manufacturing, rns cals, members els provided with werk opportunities. ATL Activity 2.1 (Research and Thinking skills) Cooperatives operate under the guidelines and Drncpls of the iterational Cooperative Allance {0A founded in 1895. Investigate the role of he ICA {hutps/icacoop and how it suprors the cooperative ‘movement around the woreDisadvantage of cooperatives So are more intrested in Now fe performs hi Stef motnaton and produc, Disincentve effects = Tere might be ineffective manages| td employes ss cooperatives do not poy gh snes ana ormfenent and employee oy. Dachlonmaling power Enployee: Rave 033) how be psinesr ran Thewe a democrt system of members Raving equa ving ight Tican ao improve the member Limited sources of nance -Coaperatves might suf fon Sock of ronce a most of than eannot ase funds tou 5 Stock eachange, Sources of france ae ate ie 9 he mount conte by ther mane Social benefits Cooperatives ar run ons {han ony forthe owners Thus, cooperatives aly pana princes eding to gin fr oer members of sce) ater esc gas lower dedilon-making = Dedions are Waly tobe dows down Wye) a all errs of the cooperative work $ emectate way andre ivaed inthe decision aki tse in the nue he cooperative stand fo ATL Activity 22 (Research and Thinking skills) CORE Investigate the various (ypes of forproft social fenterprizes Such as co-operatives In your county ‘Choose one arganzation ad tesearch is ison and objectives and how it operates. Be prepare to share yourfndings wth the rest ofthe as. Panic support ay sdvariage of soca enterprises ach Eoopertvessthatthere tends tobe public suppor. epee incng customers wanttbalpthem succeesbeause Ney _| teas cooperatives operate inthe rivet sctr they ar an example of pate sector for prot scl enters. Timited promational opportu: ~ Cooperatives tnd t ave fatter gonzon structs (se Chapter 8) 50 te bre fewer opportuni for emloyees 1 progres i thy Non-profit social enterprises (AO3) ot (cos) 180, 2022 rol sda enya it Nene ee tbe oan pa ted, xin ‘sca mri esse ep ae Son ding ps et he Cha lhe gy ol eg tut emake fey wha we gh amples incade public Hbeaes, state school, museums gmernment hospitals and socal services Wel-known 200 Prof sci enterprises ince Hablat fr Humanity. Oxfam, the Red Cros and the World Wie Fund fr Nature he main type of non-profit socal estpises Is non-government ngmnizations (NGOs), incding, feterational charitable orgniations.Figure 26- NGOs sve tomake the world a beter pace Exam tip ‘The trm non-profit exganlzatlon’ does not mean that, tha businasedoes notstve to eam a proftorsurplusbut ‘hat this money mustbe retained in the organization for is selfpreservation and growth Profits the reward that is isubuted to the owners or investors of a business in retum forking their money in the busines By contest, how-prft ezanzations (NPO} retain this surplus in the busines. For example, many private fee paying Schools are NPOs because any surplus that they make is reavested inthe schools enhance the faites and Improve teaching and eoming, Non-governmental organizations (NGOs) The United Nations (UN) defines om governmental crganzations (NGOs) at “Pvteorgniatins that pursue ctv to elle slfrng, promote the iter ofthe poor, protect the environment, provide base social series or undertake community developmen: They ar private sector aot for-profit socal enerritesthat operate forthe benefit of ‘hers rather than primarily aiming to ena post. Examples inde Médecins Sans Fonte (Doctors Without Borders) tnd Friends of the arth The term “non-governmental organization’ was coined in Artie 71 ofthe UN Carte that was formed 1915, An NGO, Sometimes refered i asa private voluntary organization (00), cat be any kindof crganiaton olang a 1. itisindependent fhe government or drs public sector influence and 2 tent for pro Many NGOs avery ge erganiatins,sachas Oxfam (global sorety lleriaton), Greenpeace (aionmentl proeton, “Amnety International (ham righs) and the United Naons International Childeens Fund or UNICEF (len wel They are ray 3 group of enor managers and trustees, sil told lability company bar of dros There are fo main ype of NGOs: + Operational NGOs are etal fom a gven objet ‘or prpote. These NGOs end abe inven elie based and community projets, ich Oxf and UNICEF + Adracsey NGOs take proach to promete or defend a particu cise, stiving to rise aaeness and support toh det action (uch a lobbying publ elton nd nas demonstrations) such ts Greenpeace and Amnesty Inepational Case study 2.6 -The Foundation |& Melinda Gates The Bl & Meinds Gates Foundation was et up 2000, to enhance healthare and reduce exteme poverty ound the world I the largest non-profit private Sector socal enters n the wild The Foundation i onal by its thre trustees tv people atthe top of the organization: il Gates. Melods Gates and Warren But =the tree most generous philanthropists inthe USA. According to CNBC, gill ard Melinda Gates have ‘donated ove §50%ilion othe Faundation. Theory of Knowledge (TOK) Can we now’ If forprot organizations do not cae shout society ¢ much asnon-pet soll entrprises? 35BC) Ne EA cers sR OMe eee clbi adden ‘Types of business entities and the key concepts, There are varios factors that abc the statepc choice of sine ent nad Figure 2.7 -Some businaszeschoose to remain sal «Amount of finance - Sole ders and partnerships need [essart-op capital than apubliyheld company. change in the ea tats of «business wl ually require more Key concept With reference to an organzation of your choice rine how change has afuenced its business finance ee Chapter 10 + Size = The larger and more complex the busines perio the move ikl ts to be a nited ability stategy and choice oflegal busines entity Company (corporation), Sle trader, for instance, init ‘ameesary or unafiordsbetohite a are weekorceor © ‘operat tal hierarchical structure (ee Chap 8 Limited Lisbty- The dese to hae limited itty, n ‘an fect the choke of legal status ofa busines entity Key concept (oolld Discuss the ol of creativity creating sustainable Degree of ownership and contrl - Those who with to competitive advantages for busines organization of retain control and ownership of business may prefer to your choice ‘ty ebtely sal as leaders vena pray ld ‘companies. The nature of busines activity ~The type and scale of busines activity can inBuence the legal status of an fngentabon, ef, tsnstream ara and motor vehicle ‘manufatres rely on ereral sources of finance (se (Chapter 14, vo ae Uke toe formed as publ held companies Change ~ Asa busines grows and evaes ee Chapter 6) tt may ned ational sures of fiance and human resources Thus the ype of orgnization nd isle status are kl to changeREVIEW QUESTIONS How des the priate secor dif frm the plc ecto? ‘Whats sole ade? ‘Watare the advantage and disadvantages of a soleteaer Whatisaputnersip? What arethe advantages and diskvantages of pastaeship sabarines entity? Whatirs privately held company? ‘Why isthe concep oil ably inpetant for ners of acompany? ‘hata pbiciy held company? How cs a pivatly ed company der from a pblly held company? What are the advantages and disadvantages of lmted abi compe form of busines ety? ‘What are the dferences between priate and publics for poi socal enterprise? ‘What are cooperatives? ‘What are the advantages and disadvantage of cooperatives storm ofbarinest entity? Whats non-governmental ongaization (NGO)? Pe eked ad KEY TERMS. Cooperatives ar for prof soc enterprise setup, owned ad run by ther members, who night be employees andor company or corporation) refs limite iby basness that sowed by sarholders. A etticate of incorporation tres the company a separate legit from its owners (eharcholdes, Deed of partnerships the legal contact signed bythe owners of a partnenhip. The formal deis specify the name and responses of each pustner and their proportion of any Profs oloses, Incorporation means that thre eal ference between the owners fs company andthe bases elf. This neues that the ners are potted by ited nly, An nial public offering (IPO) oss when busines elle All or prt oft basins o shared on public sock exchange forthe Sst time Thi chges the eg stats of the ‘busines toa pub held company Limited ability sa resrton on “he amount of money hat ‘owner of company can lose if the tsi goes basket, inthecmpay ‘Non-governmental organlzations (NGO) ae private sector not-for prof soil enterprises tha operat forthe benefit of | ers ater than pearly ling to eam 8 profit ich a (Oxfam and Friend ofthe Earth. Partnerships ore a type of print sector busnes etsy vend by 2-20 people (own as >arter). They sate the responses and burdens of running and owning the ‘ones “The plate sector i the part af he economy rn by private Individuals and business, rather han by the government, such assole traders partnerships print el company ad publ held compe. A prlvately held company i busines ons by sharcholdes Wit united Lab bt whose share cannot be ought by ce Sold tothe general pulicon Stock Exchange. 3”