Unit 1 Business Organisation and Environment Edit 0 0 11…
Business Organisation and Environment Revision Notes

Table of Contents
Business Organisation and Environment Revision Notes
1.1. Nature of Business Activity
1.2 Types of Organization
1.3 Organisational Objectives
1.4 Stakeholders
1.5 External Environment
1.6 Organisational Planning Tools
1.7 Growth and Evolution
1.9 Globalisation
Higher Level Questions
1.1. Nature of Business Activity

1. What is a business in terms of inputs into, outputs form and the processes a business undertakes?

A business is a decision-making organization involved in the process of using inputs to produce goods and/or to provide services. Inputs are the resources, such as labour and raw materials, which a business uses in the production process. The process produces outputs, which are also known as products. A product can be a good or a service. Goods are physical products. E.g. cars, computers, books and food. Services are intangible products such as a haircut or a bus ride.

2. What are the functions of a business?

Businesses exist to satisfy the needs and wants of people, organizations and governments. Needs are the basic necessities that a person must have in order to survive. Wants are the desires that people have. I.e. things that they would like to have. As a business gets larger, it becomes more important to have clearly defined functions, such as human resource management, production, marketing and finance. These functions are likely to be carried out by specialist departments.

3. Why are the following functions of a business: marketing; finance and human resources?
Marketing: There are 7 main functions of marking, Distribution, Selling, Financing, Market Information Management, Pricing, Product/Service Managemnt, Promotion.
Finance: There are 4 main fuctions of finance, making payments for expenditure incurred in business, Fulfilling the requirements of working capital, Purchasing office premises and office buildings, Purchasing plant and machinery.
Human resources: There are 4 main funtions of human resources, managing change and facilitating training and development, recruitment, selection and employee relations, pensions and benefits, communicating with employees.

4. How does business activity combine human, physical and financial resources to create goods and services?
A business has to combine human, physcial and financial resources to create high quality goods and services. This can be done by hiring reliable, hard working staff and manging finances efficiently by pricing appropriately and monitoring exenditure efficiently.

5. Define and explain what the primary, secondary and tertiary sectors of the economy are.
Primary sector: Production/Extracton of raw materials
Secondary: Creating/Refining the product
Tertiary: Selling the product

1.2 Types of Organization

1. What is the difference between the private and public sectors?
Private sector: Privately owned businesses that are not part of any government, eg Apple
Public sector: Businesses that are owned and operated by the goverment, eg NHS

2. What are the reasons for people setting up a business?
Because they have seen a gap in the market and want to make money from their idea.
They want to be their own boss and make their own decisions.
Can be very profitable.

3. How exactly could a potential entrepreneur identify a market opportunity?
A market opportunity can be identified through market research that can be primary or secondary, depending on where the research is sourced from.

4. Explain the various problems that people will face when they are attempting to start a business.
A common problem with business start-ups is lack of funding to purchase premesis or equipment that is necessary to commence trading. Even if the necessary assests are bought, new businesses often start trading at a loss due to little awareness of the business, no reputation. Also, an