Resumen final business 2022

1.1 introduction to business management:

• The production process:
inputs (factors of production)

- natural resources, raw materials, human resources and capital.

Conversion process (factories)

Outputs

- products and services

- (outputs includes both goods and services)
➔ Goods are physical products ( e.g. cars, computers, books and food.)
➔ Services and intangible products (e.g. haircuts, bus rides, education and health care.)
• Business functions:

Human resources: manages the personnel of the organization.

Finance and accounts: managing the organization’s money.

Marketing: they identifying and satisfying the needs and wants of costumers. (make sure that
products sell)

Operations: manages the resources wich are dedicated to the production and delivery of products
and services.

• Business sectors:

Primary → extracts raw materials ( extraction activities: fishing, farming, mining, foresting)

Secondary → manufactures goods (transformational activities: construction manufacturing)

Tertiary → provides information (sell of goods and products from primary and secondary sectors)

Quaternary → provides information services such as IT (information technology)

• The role of a entrepreneur:

Entrepreneur→ someone that takes the financial risk of starting and managing a new business
venture. (successful entrepreneurs are: innovative, creative, committed and self motivated)

Entrepreneurship: (people who set up their own new business)

- An idea for a business.

- Invested in their own savings and capital.
- Accepted the responsibility of managing the business.
- Accepted the possible risks of failure.

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Intrapreneur → is an entrepreneur who turn their ideas into profitable products and services as
an employee of the company.

1.2 types of organizations:

• Public and private sector organizations:

Private sector → businesses owned and controlled by individuals or groups of individuals.

Public sector → organizations that are primarily financed and controlled by a country's
government. Often provide essential goods and services for people.

Privatization → the sale of a public sector organization to the private sector.

• For profit organization:

Sole traders → business own and controlled by a single person.

Partnership → business where two or more individuals jointly own and take responsibility fo the
business. They share the decision making process and profits made by the organization.

Companies / corporations :

- Limited liability → if the company fails, the amount invested will not be loss in a
partnership
- Legal personality → a company is legally recognized as having an identity separate from
that of its owners.
- Continuity → the death of an owner or director does not end the company.

Private limited companies – LTD → business where shareholders are invited to buy shares in the
business by the existing owner.

- Shareholder → a person or institution who owns shares in a company and are owners.
- Share → certificate confirming part ownership of a company.

Public limited companies – PLC → large business that sell their shares on a stock exchange to
public investors.

For profit social enterprises → business with mainly social objectives that invests it profits into
benefiting society rather than maximizing returns for shareholders. Three main aims:

Economic → to make a profit or surplus to reinvest back into the company and provide some
return to the owners.
Social → to provide jobs or support for local, often disadvantaged communities.
Environmental → to protect the environment and to manage the business in an environmentally
sustainable way.

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1.3 organizational objectives:
• mission and vision statements:

mission→ a business declares an organization purpose, or why they exists (present).

Vision→ when a business sets out where they would like to be in a long term (future).

• Common business objectives:

Aims → long term goals that a business wants to archive in the future.

Objectives → targets set by an organization to archive something.

Strategy→ long term plan that plans the different ways they will be going to archive their aims.

Tactics → specific techniques used by a business to achieve their objectives.

• Ethical objectives and corporate social responsibility (CSR)

Ethical objectives → business objectives influence by moral values.

Corporate social responsibility (CSR)→ where the organization consider the interest of society.

• SWOT analysis: planning tool for guiding business strategy:

➔ It looks at the current situation facing a business through its strengths and
weaknesses which are internal to the business.
➔ Opportunities and threats relate to future prospects that are external influences on
the organization.

Helpful Harmful
Internal Strengths (S) Weaknesses (W)
External Opportunities (O) Threats (T)

• ANSOFF matrix: plan to evaluate the growth strategies related to the products the
business sells

Existing New
Market penetration Product development
Existing
(low risk) (medium risk)
Market development Diversification (high
New
(medium risk) risk)
Increasing risk

Market penetration → business focuses on selling an existing product in a existing market.

Product development→ selling new or modified products to existing markets.

Market development→ marketing (selling) an existing product in new market.

Diversification→ selling new product and services to a new market.

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1.4 Stakeholders
➔ Stakeholder: person, group or organization that can affect or be affected by
organization actions, objectives and policies. They have an interest or concern in any
action taken by an organization.
➔ Internal stakeholders: employees, shareholders and managers
➔ External stakeholders: suppliers, costumers, government.
• Stakeholder mapping / stakeholder analysis

Is a management tool used to determine the key stakeholders of an organization based on the
varying degrees of power and interest of the various stakeholders groups.

Low < ---------------------
Power
-------------------- > high
Levels of interest
Low < -------------------------------------------- > high
A minimal effort B keep informed
C keep satisfied D key players

Group A – Minimal effort → business can devote little energy and attention to satisfying their
interests.

Group B – keep informed → feel included is important

Group C – keep satisfied → must be kept satisfied as they have the power to influence other
groups.

Group D – Key players → business need to focus on their needs over the others. They must be
consulted before any decisions are made.

1.5 External environment

➔ All businesses exist in an external environment that has important effects on their
decisions making.
• Steeple analysis→ analysis focused on the opportunities and threats of the external
environment that affects businesses when are developing strategy and making decisions.

-STEEPLE stands for:

Social: Social factors include demographics such as population size and structure, lifestyle, age
groups, fashions or tastes and education levels

Technological: Factors include the state of the technological advancement and introductions of
new technologies , infrastructure, research and development costs

Economic: Factors such as GDP growth rate, inflation rates, interest rates, exchange rates, the
business cycle, unemployment rates

Environmental: It includes weather and climate of the region, the flora and fauna of the region,
environmental pressure group activity, carbon footprints

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Political: Factors such as the type of government that exists and its ideology as shown by it
attitude to free markets, imposition of tariffs, trade policies, business incentives offered and the
stability of the government

Legal: The legal factors include any law influencing business activity, eg competition law, health
and safety at work, consumer protection, employee protection

Ethics: The general code of ethics followed by most of the people in the region, and the tendency
of the people to be ethical, corruption, fair trade

1.6 growth and evolution

economies of scale:

➔ cost advantages firms benefit from as their scale of production increases.

1- Purchasing economies: bulk buying economies, ability for large firms to buy and sell in
bulk (e.g. makro)
2- Technical economies: large firma use large scale machinery that reduces unit costs.
3- Financial economies: two cost advantages
➔ First banks often prefer big business and interest rates offered are often lower than
the rate change to small business.
➔ Second, raising money by “going public” or further issues of shares is very expensive.
4- Marketing economies: marketing costs do rise eith the size of th business but not at the
same rate.
5- Managerial (specialist) economies: as a firm expands it can afford to attract specialist
functional managers.

Diseconomies of scale

➔ Cost advantages that result from the increase in the size of an organization.
1- Communication: as the firm expands it becomes difficult for managers to communicate
with everyone.
2- Motivation: as the firm expands, employees feel more distance from the senior
management of the business
3- Administration: increased costs of administration are more likely as business expansion
often leads to many departments, divisions and products.

small vs LARGE organizations

large → shares with a high total value

small→ firms that employ fewer people and have lower sales compared to other firms.

Mergers and acquisitions:

- Mergers → combination of two similar sized companies into a new company

(e.g. Disney + Pixar)
- Takeover→ when one firm acquires more than a certain number of shares in another firm
and effectively takes control of that business.
- Acquisition→ when one company clearly purchases another to become the new owner

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Joint venture → two or more businesses agree to work closely together on a particular project
and create a separate business division to do so.

Strategic alliance→ agreements between firms in which each agrees to commit resources to
manage a project together.

Franchising → where a business (a franchiser) sells the rights to produce a good of service under
its brand name to another business (a franchisee)

Globalization→ The growing integration and independence of the worlds economies causing
consumers around the globe to have increasingly similar habits and tastes.

Multinational corporations → a business that has an operational base in more than one country.

2.1 functions and evolution of human management:

Human resources → group who is responsible for managing the employee life cycle
(hiring, firing, recruitment) and administrating employee business.
Labour turnover→ refers to the movement of employees into and out of a business in a given
time. It is measure by the following formula:

Labour turnover = number of staff leaving / total number of staff X 100

Recruitment → process of identifying the need for a new employee, defining the job to be filled
and the type of person needed to fill it. Three stages:

1- Identification/job analysis → first you need a job description, (a document that outlines
the details of a particular job) and Person specification (an outline of the ideal candidate
such as their qualifications, skills and experience are determined).
2- Application → and advertisement is created and candidates apply for the job (application
form, cover letter and resume).
3- Selection → interview are held, reference contacted, digital footprints checked and
sometimes tested occurs as well. Then, the job offer is made to the best candidate.

Internal and external recruitment:

➔ Internal recruitment: when the business looks to fill the vacancy from within its
existing workforce.
➔ External recruitment: when the business looks to fill the vacancy from any suitable
applicant outside the business.

Training→ after recruitment comes training. Help the new employee professionally develop, be
up to date with all the latest ideas and technologies.

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Types of training:

➔ Induction: training on making an employee familiar with the way the business
functions
➔ On the job: when employees are being trained while they are doing their normal job.
➔ Off the job: employee is given time off from work to attend training away from their
job e.g. azafatas
➔ Cognitive training: helps employees develop their thinking and processing skills.
➔ Behavioral training: develop their interpersonal skills (how they work with others) and
interpersonal skills (how they manage their emotions).

Appraisal → formal assessment of an employee’s performance in fulfilling his / her job based on
the tasks and responsibilities set out in their job description.

Types of appraisal:

➔ Formative: give employees feedback when they have done well and where they have
difficulties, help employees improve.
➔ Summative: measures the employees performance whether and employee has passed
or failed. They measure it against set standards.
➔ 360 degree: complex appraisal as it has multiple perspectives.
➔ Self appraisal: individual employees reflect on their own performance.

Termination, dismissal and redundancy→ when an employee leaves the business.

➔ Resignation: an employee chooses to leave the business.

➔ Dismissal: the business decides that the employee should no longer work there.
➔ Retirement: employees because of their age they retire from their workforce.
➔ Redundancy: the job ceases to exist.
➔ Dismissal: when a worker is told to leave the job because of inappropriate behavior.

Dismissal:

➔ Incompetence: lack of ability or effectiveness in carrying out the job.

➔ Misconduct: unacceptable behavior (harassment, rude to costumers)
➔ Gross misconduct: theft, fraud, sexual harassment, alcohol use at work.
➔ Legal requirement: unnecessary skills requirements for the job.

- to dismiss an employee (except for gross misconduct which is immediate), there are
usually three steps:
First - an initial warning - can be verbal or in writing.
Second - an official written warning and a formal meeting with the employer. An action plan and
time frame for improvement are put in writing.
Third - any further cases of misconduct result in dismissal.
Redundancy→ when a business no longer has any work for the employee.

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If an employee loses a job through no fault of their own, they normally receive a redundancy
package.

• Voluntary redundancy - some employees chose to be redundant.

• Involuntary redundancy - it could be based on age, years of service or other criteria.
Outsourcing → having an external organization perform some aspect of a business’s operational
functions. (contratar algo para tu business, e.g. que el colegio contrate un catering)
Offshoring → hire a service outside the country (something outside the country).
Re-shoring → where the HR activities are brought back to the country of origin.
Ethical considerations – offshoring → production costs are cheaper elsewhere, then production
should be move offshore, but there are many ethical implications for business to consider.
Work practices on the increase:
➔ Part time work: employees work less than the full time maximum hours.
➔ Temporary: work that is on a flexed term contract of a temporary nature.
➔ Freelance: when someone why is self employed works for several different employers
at the same time.
➔ Teleworking: work taking place from home or a telecommunications center.
➔ Homeworking: an employee works from home, also it is expected to go to the office.
➔ Flextime: work involving a set number of hours of the employees own choosing.
➔ Casual Fridays: less formal dress on Friday.
➔ Three day weekend: the employee works 4 days of 10 hours and has a 3 day
weekend.
Changes in work preferences: instead of working continuously for 20-30 years for the same
company many employees are adapting their routines to suit changing lifestyle.
➔ Career breaks: the employee decides to stop working for a time “sabbatical”.
➔ Job share: two or more employees decides to share a job in order to free up time for
other activities.
➔ Downshifting: an employee gives up a higher position in order to change into anther
lower paid field or area of interest.
➔ Study leave: employee is granted time off work to acquire a new qualification.
2.2 organizational structures:
Organizational structures→ the internal, formal framework of a business that shows the way in
which management is organized.
Traditional hierarchy structure→ structure with different layers.

1- Senior leader
2- Managers
3- Supervisors
4- Front line
• (es el orden en el que aparecen en la pirámide ☺)

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Organizational charts: diagram that outlines the formal roles, responsibilities and reporting lines.
Accountability→ this shows who is responsible for a particular job.
Responsibility→ this shows who is in charge of whom and in what role.
Levels of hierarchy→ how many levels of responsibility are in a business.
➔ Line managers: people who have the authority to make decisions and who are
responsible for the outcome of the decisions.
Chain of commands→ where instructions are passed through the layers in the hierarchy.
Span of control → how many subordinates are directly under the authority of a manager.
Delegation→ when a manager gives a task to another employee but is not the responsibility for
the outcome. (e.g. if the employee doesn’t complete successfully the job, the manager will have to
take the responsibility for the incomplete task)
Centralization and decentralization:
➔ Centralization: when the senior management maintains a high level of control over
decision making in the organization.
➔ Decentralization: when the CEO and senior management delegate decision making
responsibility to managers in different areas of the business.
Bureaucracy → is the rules, policies and procedure that exist in an organization.