Topic 1 Role of Business in Society. Higher Business Management

Transcription

1 Topic 1 Role of Business in Society Higher Business Management 1

2 Learning Intentions / Success Criteria Learning Intentions Role of business in society Success Criteria Learners should be able to classify and describe the following: sectors of industry, business activity in the primary sector, secondary sector, tertiary sector and quaternary sector, sectors of the economy, organisations in the public, private and third sectors. 2

3 Sectors of Industry Businesses belong to different sectors of industry: Primary Secondary Tertiary Quaternary 3

4 Primary Sector Businesses in this sector extract raw materials from the natural habitat (earth or oceans). These raw materials are then passed to the next sector in the production process. Examples of businesses operating in the primary sector are farming, oil extraction, fishing and quarrying. 4

5 Secondary Sector Businesses in this sector manufacture products by taking raw materials and making them into finished products. Examples of business operating in the secondary sector are manufacturers of products such as washing machines, cars, food or computers. 5

6 Tertiary Sector Businesses in this sector provide a service. Examples of business operating in the tertiary sector are hairdressers, banks, travel agents, schools, dentists, etc. 6

7 Quaternary Sector Businesses in this sector provide a knowledge-based and information service. This includes scientific or technological research and development and education. The quaternary sector is sometimes included with the tertiary sector, as they are both service sectors. 7

8 Sectors of the Economy As well as operating in a particular sector of industry, businesses and organisations also operate within a particular sector of the economy: the private sector, the public sector or the third sector. 8

9 Private Sector This sector of the economy is owned and controlled by private individuals and is made up of types of businesses known as: Private limited companies (Ltd) Public limited companies (PLC) Multinational Franchise They are funded by private individuals and shareholders. 9

10 Limited Companies There are two main types of limited companies: A private limited company (ltd) A small business such as an independent retailer in a market town. Shares do not trade on the stock exchange. A public limited company (plc) A large, well-known business. This could be a manufacturer or a chain of retailers with branches in most city centres. Shares trade on the stock exchange. 10

11 Private Limited Companies (Ltd) Typically, private limited companies are owned by individuals, families or friends. The company name is usually followed by Ltd. The share ownership of the company is by invitation only and the shares are not sold on the stock exchange. 11

12 Public Limited Companies (PLC) A public limited company (plc) is a company that is owned by shareholders. Shareholders are people who have bought shares in the company, perhaps through the London Stock Exchange. The company is owned by shareholders and run by a Board of Directors who have been appointed on behalf of shareholders to control and manage the company. 12

13 Franchises A person who starts a business and provides a product or service supplied by another business (the franchisor) is known as a franchisee and operates a business known as a franchise. In return the franchisor would get a share of the franchisee s annual profits or an agreed annual royalty. The franchisee is allowed to use the business name (eg McDonalds), branding, publicity materials, uniforms and sell its products. 13

14 Multinationals A multinational organisation is one that operates in more than one country. It will normally have a headquarters based in one country; this is known as the home country. Because it operates in more than one country, it will be globally recognised. A socially responsible multinational organisation may have a positive impact on the local economy and community by providing jobs and creating wealth for the local area. 14

15 Public Sector Public sector organisations are owned by the Government on behalf of the taxpayer and aim to provide a service to the general public. They are funded by taxes that individuals and businesses have to pay. Different types of taxes exist including income tax, road tax and council tax. Taxes goes towards schools, hospitals, the armed forces and social services. 15

16 Third Sector This is made up of charities and other community organisations that aim to raise money for good causes and to help people. The third sector also includes social enterprises and cooperatives. They are not owned by anyone: they raise money from donations, fundraising activities and grants from the lottery. 16

17 Charities Non-profit making organisations such as charities and voluntary organisations are set up to support specific causes. Charities are owned and controlled by a Board of Trustees. They are regulated by the Government, and the income they make is put towards a specific cause. Charities will undertake fundraising activities to raise finance, e.g. by asking for grants/donations through TV appeals, street collections or by selling unwanted items in a charity shop. 17

18 Social Enterprises Social enterprises trade in all markets, selling goods and services to individual consumers, local authorities, government and private businesses. Social enterprises have a social or environmental aim rather than to make profit for owners or shareholders, but are run in a businesslike way. The business will let customers know what the social enterprise is trying to do and who it is trying to help. All of the profit that it makes, through selling goods and services, must be invested into meeting the aim of the social enterprise. Unlike some charities, they don t rely on grants and donations, but some social enterprises do become charities. 18

19 Examples of Social Enterprises Aberdeen Foyer - a social enterprise set up to try and help homeless youths in the Aberdeenshire area. As well as this, they provide opportunities for young people to develop employability and life skills. The opportunities they provide range from construction and property maintenance to graphic design and driving training. Active4AII - this social enterprise provides nearly 100 jobs by collecting waste materials and unwanted furniture and then selling them. It is based in Glasgow. Wooden Spoon Catering a social enterprise based in Dundee with the aim of providing job and education opportunities for women who might be isolated or in a vulnerable position. 19