1

Business Activity & Economic Sectors

🏭

Understanding Business Activity

Business activity is the process of producing goods and services to satisfy consumer needs and wants while adding value through the transformation process.

Inputs

Resources: Land, Labour, Capital, Enterprise

Process

Transformation & Value Addition

Outputs

Goods & Services for Market

Economic Sectors & Development

Sector Activities % in UK Economy Employment Trends
Primary Extraction of raw materials 1.5% Declining due to automation
Secondary Manufacturing & construction 15% Steady decline, offshoring
Tertiary Services provision 75% Rapid growth
Quaternary Knowledge-based services 8.5% Fastest growing sector

📈 Clark-Fisher Model of Sectoral Change ▼

Stage 1 (Pre-industrial): Primary sector dominates (agriculture)

Stage 2 (Industrial): Secondary sector grows (manufacturing)

Stage 3 (Post-industrial): Tertiary sector expands (services)

Stage 4 (Quaternary): Knowledge economy emerges

2

Enterprise, Business Growth & Size

📈

Entrepreneurship & Business Planning

Entrepreneurial Characteristics:
  • Innovation: Creating unique solutions
  • Risk Management: Calculated risk-taking
  • Resilience: Persistence through failure
  • Vision: Seeing future opportunities

Business Plan Components:

Executive Summary

Business overview & objectives

Market Analysis

Target market & competition

Operations Plan

Production & delivery methods

Financial Projections

Funding needs & profitability

Growth Strategies Comparison

Strategy Method Best For Risk Level
Organic Growth Internal expansion Established businesses Low
Horizontal Integration Merge with competitor Market dominance Medium
Vertical Integration Control supply chain Cost reduction High
Diversification Enter new markets Risk spreading Very High
3

Types of Business Organisation

🏢

Private Sector Business Structures

Business Type Legal Status Capital Raising Suitable For
Sole Trader No legal separation Personal funds only Small local businesses
Partnership Joint liability Partners' capital Professional services
Private Ltd Separate legal entity Private shareholders Growing businesses
Public Ltd Public company Stock market Large corporations
Franchise Licensed model Franchise fee Brand expansion

Public vs Private Sector

🏛️ Public Sector Objectives:
  • Service Provision: Essential services (NHS, education)
  • Market Failure Correction: Where private sector fails
  • Social Welfare: Redistributive policies
  • Strategic Industries: Defense, utilities

🔄 Privatisation & Nationalisation ▼

Privatisation Advantages:
  • Increased efficiency
  • Government revenue
  • Consumer choice
  • Innovation incentives
Privatisation Disadvantages:
  • Job losses
  • Price increases
  • Service inequality
  • Short-term focus
4

Business Objectives & Stakeholder Objectives

🎯

Hierarchy of Business Objectives

Mission

Core purpose & values

Corporate Objectives

Long-term (3-5 years)

Departmental Objectives

Functional targets

Individual Targets

Employee performance

Types of Business Objectives

Objective Type Primary Focus Measurement Example
Profit Maximisation Financial returns Profit margins Increase net profit by 15%
Growth Market expansion Market share Open 10 new stores
Survival Business continuity Cash flow Maintain positive cash flow
CSR Social responsibility ESG metrics Reduce carbon by 30%
Satisficing Adequate returns Owner satisfaction Maintain lifestyle

Stakeholder Mapping & Management

📊 Mendelow's Matrix (Power/Interest Grid):

High Power, High Interest: Key players (manage closely)

High Power, Low Interest: Keep satisfied

Low Power, High Interest: Keep informed

Low Power, Low Interest: Minimal effort

🔥 Stakeholder Conflict Resolution ▼

Conflict Resolution Strategies:
  • Negotiation: Win-win solutions
  • Compromise: Mutual concessions
  • Collaboration: Joint problem-solving
  • Arbitration: Third-party decision
5

Human Resource Management

👥

Organisational Structures

Structure Types Comparison:

Structure Features Advantages Disadvantages
Tall/Hierarchical Many levels, narrow span Clear promotion, specialization Slow communication, bureaucratic
Flat Few levels, wide span Fast decisions, empowerment Overloaded managers
Matrix Project teams, dual reporting Flexible, expertise sharing Conflicting priorities
Network Outsourced functions Cost-effective, flexible Control issues, quality

Motivation Theories in Practice

📚 Maslow's Hierarchy of Needs:
5. Self-Actualization

Growth & achievement

4. Esteem

Recognition & status

3. Social

Belonging & relationships

2. Safety

Security & stability

1. Physiological

Basic needs & salary

💼 Herzberg's Two-Factor Theory ▼

Motivators (Satisfiers):
  • Achievement
  • Recognition
  • Work itself
  • Responsibility
  • Advancement
Hygiene Factors (Dissatisfiers):
  • Salary
  • Company policy
  • Supervision
  • Working conditions
  • Job security

Recruitment & Selection Process

1. Job Analysis

Identify requirements

2. Job Description

Duties & responsibilities

3. Person Specification

Skills & qualifications

4. Advertising

Internal/external

5. Selection

Interviews & tests

6. Induction

Training & onboarding

6

Organisation & Management

⚙️

Management Roles (Mintzberg)

Role Category Specific Roles Key Activities Example
Interpersonal Figurehead, Leader, Liaison Representing, motivating, networking CEO at company event
Informational Monitor, Disseminator, Spokesperson Gathering data, sharing information Market analysis reporting
Decisional Entrepreneur, Disturbance handler, Resource allocator Innovation, problem-solving, budgeting Launching new product

Leadership vs Management

Key Differences:

👑 Leadership:
  • Sets vision & direction
  • Inspires & motivates
  • Focuses on change
  • Develops people
  • Asks "what & why"
📊 Management:
  • Plans & budgets
  • Organizes & staffs
  • Focuses on stability
  • Controls systems
  • Asks "how & when"

Management Styles

Autocratic

Centralized control

Quick decisions, no consultation

Best for: Crises, unskilled staff

Democratic

Participative

Team consultation, shared decisions

Best for: Skilled, motivated teams

Laissez-faire

Delegative

Minimal interference, autonomy

Best for: Creative professionals

Paternalistic

Fatherly care

Consults but decides alone

Best for: Family businesses

Organisational Culture (Handy)

🎭 Four Culture Types:
Power Culture

Centralized power

Entrepreneurial firms
Role Culture

Bureaucratic rules

Government, banks
Task Culture

Project teams

Consultancies, tech
Person Culture

Individual focus

Law firms, partnerships