Aims: This unit is to help the learner understand the business environment and
how it impacts opportunities for learning and work.

Learning outcome:

  1. Understand that there are different types of business

Definition: the part of the national economy that is not under direct state control.

The private sector refers to businesses that are run by individuals and companies rather than the Government. Most organisations within the private sector are also focused on making a profit.

Businesses in the private sector can range from being sole traders to large multi-national companies.

Examples include:

  • Sole proprietors: Designers, Hairdressers, Gardeners, Carpenters, Plumbers,
  • Partnerships: Dentistry, Legal, Accounting, Tax, Estate Agents, doctor’s surgeries
  • Small and Medium-sized Businesses: Retail, Hospitality, Food,
  • Large Multinationals: Apple, Tesla, McDonald’s, Disney, Netflix, Proctor & Gamble, PepsiCo, Sony, Microsoft
  • Professional or Trade Associations: Chartered Institute of Marketing, DVLA
  • Other: private schools, colleges, and hospitals

Definition: the part of the economy that is controlled by the state.

The public sector refers to businesses that are owned by the local or national government rather than individuals. They very often provide services to the general public.

Examples typically include:

  • Education (Schools, Libraries)
  • Electricity
  • Emergency Services
  • Healthcare (NHS, Hospitals, Clinics)
  • Law Enforcement (Courts, Police, Magistrates)
  • Parliament (Political Parties)
  • Public Transport (Buses, Taxis, Community vehicles)
  • Social Services
  • Inland Revenue
  • Environment Agency

An example of the public sector includes the NHS/hospitals because they are not owned by individuals and are run by the government, and Taxpayers.

Other examples of public sector organisations include schools, councils, police, and leisure centres.

Definition: is the undertaking of social activity by an organisation that is non-governmental or for profit. Sometimes called the third sector.

The voluntary sector refers to non-for-profit organisations such as charities or trusts. The aims of voluntary sector organisations are to preserve, protect and promote their cause. Normally comprised of skilled workers, and volunteers and usually have multiple stakeholders.

Examples include:

  • Helping the homeless
  • Supporting families of medical patients
  • Cancer research
  • RSPCA, Oxfam, Relate, Help for Hearos, Mind

Private sector

Advantages:

  • Variety of the workload.
  • Work for more than one client.
  • Operate from many locations.
  • Can work from home some or all of the time.
  • Better remuneration.
  • More agile to change.
  • More challenging and engaging work.
  • Financial bonuses.
  • Unlimited earnings are possible.

Disadvantages:

  • May have longer working hours and lower pay.
  • Low job security due to competitors.
  • Short-term contracts.
  • Poor work-life balance.
  • More stress and mental health issues to deal with.

Public sector

Advantages:

  • Set routine.
  • Flexible hours.
  • Higher job security – less likely to get fired.
  • Better pension prospects.
  • Normally offer better health packages including optical and dental care.
  • Voluntary overtime where available.
  • Better promotion opportunities.
  • Better work-life balance.

Disadvantages:

  • May end up doing the same thing every day and therefore, the job becomes boring.
  • Poor working culture.
  • Zero contract hours.
  • Slow change management structure.
  • Salaries are on par with the private sector but have less chance of an increase over the same period.
  • No financial bonuses.
  • Harder to be promoted outside of existing roles.
  • Remuneration follows legislative changes.
  • Bureaucracy – innovation, approval, funding, red-tape, etc.

Voluntary sector

Advantages:

  • Helping others is considered a self-rewarding job.
  • Flexible hours to suit.
  • Potential to be paid more than being in either public or private sector.
  • Collectively working towards a common goal.
  • Exposure to lots of experience, opportunities, and skills.

Disadvantages:

  • Low or zero pay and longer working hours.
  • Time-consuming.
  • No sense of achievement – ie. A charity helping homelessness and promoting food banks but unfortunately, the problem may remain.
  • Constant funding issues.
  • Legislative and compliance issues.

Operations 

Operations are the tasks, jobs or processes that businesses undergo to produce their product or service.

Operations allow a business to run smoothly and efficiently by spending and investing money wisely and then careful management of its time in order to increase sales and the overall efficiency of the business.

For example, a restaurant’s operations would happen in the kitchen where the chefs cook the food to provide for their customers.

Describe your role within your organisation and what value that provides.

People 

(Human Resources) HR is responsible for managing people in the organisation.

For example, they deal with making sure that the working environment is safe for employees as well as ensuring that employee welfare and relations are positive. By adhering to and complying with several legislative laws they reinforce a safe and secure work environment.

Information 

This plays an important role in an organisation because it guides every decision an organisation makes or expects to make. Thus, information is important in the decision-making and problem-solving processes, and without the right information, organisations are bound to make mistakes in these key processes.

An organisation needs to have information about its Strengths, Weaknesses, Opportunities, and Threats in what is known as a SWOT Analysis. The main idea of a SWOT Analysis is to ensure the organisation knows its internal and external position in order to secure and grow its business. The information is also important because it helps the organisation devise better strategies for dealing with their competitors. Knowing its brand value proposition is what helps provide laser focus in a crowded market.

Research and development and Finance 

Research and development are when businesses conduct market research to find out what their customers like and dislike about their products of services.

One of the major functional areas of an organisation that is helpful in the identification of strengths & weaknesses of the organisation after proper examination. There are certain organisations that are not involved in the research & development activities while there are certainly other organisations whose survival depends on effective research and development activities.

When an organisation formulates & implements a product development strategy, then it strongly needs potential research and development activities. It is all about the research and development of a business organisation that is able to introduce a new idea or product to the market. So, research & development have great importance in businesses.

For example, a restaurant may conduct market research by giving customers a tester of a new dish and then collecting their feedback in order to refine the dish and add it to the menu.

Different organisations split their R&D costs in different proportions but the overall R&D costs are not more than the marketing & production start-up costs. There are two basic forms of R&D in organisations which are as follows:

Internal R&D: In this form of research and development, an internal R&D department is operated by the organisation.

Contract R&D: This form is external in nature in which an outside agency or researcher is hired by the organisation for the development of particular products.

Finance

The finance department in a business is responsible for tracking and managing the money coming in and out of the business.

Other tasks can include:

  • Managing the company accounts
  • Dealing with suppliers and affiliates
  • Keeping and maintaining financial records/reports
  • Creating profit and loss accounts and forecasting
  • Paying employees and outstanding invoices

For example, it might cost a t-shirt business £10 to produce one t-shirt however they may sell their t-shirts for a higher price of £20 therefore, making a £10 profit for every shirt they sell.

On the flip side, if a company offered their product or services for a low price (or equal price to what it paid), they are unlikely to make a profit.

National Organisation

AdvantagesDisadvantages
As most national companies have multiple locations it is possible that you can work from one or many locations.
 
More opportunities to progress within their working environment.
 
Department for most functions of the business which allows you to talk to someone within that department who can help you.
 
Dedicated staff to fulfil a role.
 
More incentives are offered in the form of additional days off, gym membership, parking privileges, and extra holiday entitlement.
Less recognition from the employer as there are so many employees and therefore, hard to stand out.
 
Easy to be overlooked for promotion.
 
Your hard-working contribution can go unnoticed.
 
Too many departments and red tape that slows down the process of decision-making.

Small-medium enterprise (SME)

AdvantagesDisadvantages
More recognition from the employer as there are fewer employees.
 
More conducive environment to stand out and have your ideas heard.
 
Personal feeling that you are making a difference.
The contribution you made to the company is only felt once you leave.
 
Less individual departments for every function of the business and therefore, too many roles fall on your shoulders.
 
Fewer business incentives as the company may find it too hard to afford them or allow you extra time off due to its possible impact.
 
Hours may increase as you become overworked due to you being able to do more.

A lot more companies introducing and using technology to simplify working life. Ie. Shared conference calls, end-to-end encrypted servers for those working from home, and more casual work wear.

Other areas of changing patterns of employment locally include:

  • The demise of big brands on the high street.
  • Changing working hours and the introduction of more zero contract hours.
  • More sub-contracting of work to outside companies to provide a better ROI

Look at your area and incorporate some statistics where possible. For example, Swansea has seen a 9% increase in apprenticeships between 2018 and 2019 among 18 to 24 years olds.

One of the biggest changes nationally is flexi-hours, where employees can work early or work later. This coupled with the ability to work from home has provided many with the opportunity to progress with their career whilst allowing for the inevitable disruption family can bring.

With the advent of both the internet and mobile communication, has allowed a more seamless approach to delivering the workload.

Apprenticeships have increased both in terms of choice as well as numbers. With the opportunity to deliver more blended learning it is easier for companies to engage employees in learning programs without the disruption that had been persistent for many years. By delivering through better-structured frameworks, both employer and learner can see the value, acquire the necessary knowledge and demonstrate the skills learnt without it impacting negatively on the business.

The explosion of choice of online courses benefits both learners and employers. Less intrusive and much more cost-effective than ever before.

The rise of students going into higher education after school has resulted in a large temporary workforce available for employers such as supermarkets and restaurants.

In recent years there has been more migration in Europe to countries such as England and Germany for people who are in search of work. This has led to an increase of migrants working. In 2014, the employment rate for 15 – 64-year-olds in Europe was 64.9%. In 2008 the rate peaked at 65.7%.

Unfortunately, due to Brexit, the market reliant on temporary and migrant workers fell substantially and as a direct result impacted many markets that rely on this cheap and readily available workforce when required.

For example, Xmas uplift and summer seasonal periods. Fruit pickers are one example of where many crops perished in the fields and orchards due to a lack of cheap labour in 2019.

There is an increasing amount and range of apprenticeships available within many markets. Thus, allowing many young and otherwise, inexperienced learners the opportunity to get a foot on the career ladder whilst learning and gaining experience in the industry they wish to pursue.

Supply and demand are the amounts of commodity, product or service available and the demand for that service.

Supply often refers to what the business has to offer. Be this a product or service.

A business strives to always supply towards meeting the needs and wants of the customer.

Price refers to the cost of something or how much a business charges for its products or services. However, profit refers to the revenue or financial gain a business makes.

A business would set the price of their product or service, often higher than what was originally paid, to make a healthy profit.

For example, in my apprenticeship, we add a 15% increase to our buy price and sell the product making a 15% profit.

On the flip side, if a company offered their product or services for a low price (or equal price to what it paid), they are unlikely to make a profit.

A good example of this is McDonald’s all-day breakfast. Initially, Mcdonald’s only supplied breakfast in the morning. However, an all-day breakfast menu was in high demand from customers. As a result, Mcdonald’s met the demand of the customers and supplied an all-day breakfast menu.

Market refers to the industry that the business is in. For example, media, finance or IT. Competition is when businesses compete with other businesses in the same market or industry.

For example, a marketing company is in the marketing industry therefore, it would compete against other small agencies that are also within the marketing industry. As they try to persuade clients to go for their services so too would the main marketing company be competing to win the client?

Another example is Tesco, Sainsbury’s, Morrisons and Asda. They are both supermarket rivals as they compete to get more customers to shop at they’re stores. Plus the discounters alongside the ‘big’ four.

Examples, Mcdonald’s, KFC and Burger King

If you’re in the same market as another business, there is going to be more competition.

Tie in some elements with professional discussion – 1-2-1

Guidance