Understanding The Business Environment

1.0  Understand that there are different types of business.

1.1  Define the private sector and give examples of types of private sector businesses.

The private sector includes any business who is not controlled by the government, these businesses run with the intention of making a profit. ASDA is a private sector business as their goal is to make money.

1.2   Define the public sector and give examples of public sector organizations.

Any organization who is controlled by the government is a member of the public sector. This includes all government services such as the NHS or public schooling.

1.3  Define the voluntary sector and give examples of voluntary sector organizations.

The voluntary sector is a term for any organization who are non-profit and not controlled by the government. This could include charities such as Cancer research as they operate solely to benefit others.

1.4  Explain the possible advantages and disadvantages of working in one of the following sectors: private, public, or voluntary.

One advantage of most private sector jobs is the salary, private sector companies tent to pay much better than their government counterparts. However along with the hefty salary often comes instability, and lack of benefits. Compared to government jobs, the private sector generally doesn’t have very impressive benefits. Public sector jobs often have great government benefits such as insurance or retirement packages. Often public sector executives will end up moving to a private sector job in order to gain a raise in pay as government jobs tend to have tighter caps on what each position will receive. An obvious disadvantage of working in the voluntary sector is the lack of pay however not only does voluntary work provide a great sense of wellbeing and allows you to help others, it also provides a good stepping stone when shown on CVs and work experience.

2.0  Understand how businesses function.

2.1  Describe the following business functions:

Operations

Operations are responsible for all planning organizing and coordinating of resources and anything needed to produce the good or service. The operations department are in charge of managing the process of the business.

People

People/human resources department are responsible for all aspects of managing the people who work in the business. This can include recruitment, providing training, giving appraisals, securing working conditions, and dealing with complaints.

Information

The information system of a business is where all functions are carried out in order to support the above, the information system will process payroll, employee records, card processing, and anything else which required information to be stored securely.

Research and development

The research and development department of a business are responsible for any activity taken to update, innovate or introduce new products or services.

Finance

The finance department manages anything money related. They will deal with all auditing, accounting for and controlling of the business’s finances.

2.2  Compare the possible advantages and disadvantages of working for a national organization and a Small and Medium-sized Enterprise (SME).

An advantage of working for a national organization is that they tend to have better and more established IT standards and best practices as they have the budget available to employ people to oversee all of these. This also allows you to network. However when working for a big company you generally will be assigned one task and therefore won’t gain an awful lot of varied experience. With a small or medium sized business there will be less people to perform all tasks which means that you’ll get a wider range of tasks to do and gain more experience. Smaller companies also have the advantage that as they grow you may have the opportunity to progress and grow professionally. With smaller businesses who tend not to grow drastically there is a lack of internal movement however which may make it difficult to progress within the company.

3.0  Understand changing patterns of employment.

3.1  Outline some of the changes in patterns of employment locally.

In Ayrshire patterns of employment have changed drastically over the recent years, Ayrshire has gone from being a trade dominated constituency to more and more becoming technology related and modernized. In the past majority of workers would’ve went straight into a trade from school such as farming or mining. Now most people are working in a retail/office environment, studying to earn a profession or doing an apprenticeship – which now tend to be technology-based environments such as administration and web development.

3.2  Outline some of the changes in patterns of employment nationally.

In the past 10 years there have been many important and influencing changes throughout Scotland. There has been a large spike in the number of people working in the finance and hotel industries, and a significant drop in areas such as manufacturing and construction. This is presumably due to how incredibly cheap it is to outsource manufacturing to other countries such as China, and also that those employed in high skilled occupations has gone up 29% in the past 15 years– showing that a large quantity of students have studied and went into a skilled profession rather than learning a trade such as joinery (Gov.scot). Mental illness has also been a large issue recently which is affecting motivation and ambition as well as confidence and as a whole dropping the willingness to work to new lows with almost 80% of people in Great Britain not wanting to work (Nomis).

3.3  Outline some of the changes in patterns of employment in Europe and globally.

The global employment/population rate in 2006 was 63%, 10 years later in 2016 is had dropped drastically to only 59% (Wiley). As a contrast to this, in Europe the employment/population rate over the same period of time jumped by a massive 4% - from 58% in 2006 to 72% in 2016. This was the highest rate ever recorded for the EU (Eurostat).

3.4  Describe how changing patterns of employment may affect his/her choices for learning or work.

The main difference affecting this generations choice is that most are aiming for high skilled employment and therefore spending 4+ years at university in order to gain this, rather than going straight into employment. Another change that has drastically affected choices for learning is the mental health crisis, with many struggling from anxiety, depression or similar and being unable to work. This should not be an issue but with the lack of NHS funding and with most GPs disregarding mental health or simply prescribing medication with little to no explanation, it is becoming a national crisis which is clearly affecting employment and learning.

4.0  Understand how business activity is affected by market forces.

4.1  Explain relationship between supply and demand in the business environment.

Supply and demand is used to explain the product or service available and the consumers desire for that service or product- note this also takes into consideration price. Supply and demand can affect profit in a big way – for example, when the supply increases, the price of the product will then lower and allow for demand to increase.

4.2  Describe the relationship between price and profit.

Price is the price the product costs from suppliers which will generally be competitive, in order to make a profit the cost price (this includes any shares to be taken off for premises or wages) must be lower than the price the consumer is willing to pay.

4.3  Identify the connections between markets and competition.

The market is the group or groups of consumers who purchase your product or use your service. The competition is other brands or businesses who sell the same product or service. Being aware of both and conducting research is important to allow you to gain a higher market share.