people in business unit 1. explain the differences between commercial and non- commercial...
TRANSCRIPT
Explain the differences between commercial and non-commercial businesses
List and explain the stakeholders, with examples of each
Explain what interest groups are Explain the different types of relationships that
can occur between the stakeholders in business List and explain the key elements in a contract
At the end of this topic you will be able to...
Commercial v non-commercial businesses
A commercial business is one which has the aim of making a profit, e.g. Dunnes Stores, Ryanair, Apple
A non-commercial business is an organisation which exists for some other reason than making a profit, i.e. to provide a service e.g. charity (Focus Ireland), state agency (FÁS)
An entrepreneur is a person who spots a gap in the market, takes the initiative to set up a business and takes the risk involved in setting up in business
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Entrepreneurs
People or organisations that provide support services to the business
Examples: Financial institutions provide accounts, loans,
etc. Insurance companies provide insurance cover Solicitor provides legal advice Electricity companies provide the business
with power
Service Providers
Turn raw materials into finished products They enter into contracts with suppliers They try to make a profit by keeping costs
low and prices competitive Example – Glanbia turns milk into yoghurt
and cheese
Producers
Provides the raw materials required by producers
They compete with other suppliers for contracts by offering inducements, e.g. discounts, credit, prompt delivery or free delivery
Example – dairy farmer
Suppliers
Investors provide finance or funding for a business
In exchange, they expect a return on their money
The greater the risk they take, the greater the return the expect
Examples of investors include shareholders, banks, venture capitalists , the Government
Investors
Make or sell the goods and services for the business in exchange for payment of a wage or a salary
Employees
Interest groups represent the interests, views or goals of the various stakeholders
They achieve results by applying pressure or lobbying decision makers
Example: Society of the Irish Motor Industry (SIMI) successfully lobbied the Government to extend the scrappage scheme in for cars.
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What are Interest Groups?
IBEC – Irish Business and Employers Confederation
ICTU – Irish Congress of Trade Unions CAI – Consumers’ Association of Ireland IFA – Irish Farmers Association LVA – Licenced Vintners Association ITAA – Irish Travel Agent’s Association INOU – Irish National Organisation for the
Unemployed
Examples of Interest Groups
Relationships between a business and its stakeholders can be either co-operative or competitive
A co-operative relationship occurs when they work together towards a common goal in a mutually beneficial way (win-win)
A competitive relationship occurs when both parties want the same thing but only one of them gets it (win-lose)
Business Relationships
Employees work in teams Employees and employers agree on wages
and work conditions Producers listen to feedback from their
customers Investors give funding to entrepreneurs who
keep them informed and rewarded
Co-operation within a business
Two or more companies may form a strategic alliance
They will share skills, ideas, costs and profits Example: General Motors and Citroen jointly
developed the Opel Corsa and Citroen C3 cars
Co-operation between businesses
Employees compete with other employees for promotion
Employees look for increased wages but employers want to keep costs to a minimum
Competition within businesses
Two producers or service providers may compete on prices, e.g. Ryanair and Aer Lingus
Consumers benefit from lower prices
Competition between businesses